Funding is what makes the world go round. Finding the perfect hard money lenders in Phoenix doesn’t need to be a minefield! There are many private scammers, hard money lenders, and traditional loans, so learning what to look for and what to expect may seem daunting at first. Hard Money loans are made to help real estate investors in Phoenix, either for fix and flips, short sales, or even refinancing and gap funding. Below we discuss the different hard money loans, and how they differ from other lending options!
What are Hard Money Loans?
Hard Money loans are asset-based loans, which are centered around the property’s current and after repair value. Hard Money lenders in Phoenix, can offer fast loans, because they are based on the property value total, instead of the borrower’s credit history. Traditional mortgages from banks require a trail of paperwork and often have trouble getting financed by a bank. Credit Scores and History take a long time while deals sit and wait. Traditional lenders offer longer loan terms with smaller interest rates compared to hard money loans, but for real estate investors who need fast funding, hard money lenders are a great save for their properties.
Private lenders are another type of hard money lenders, however private lenders are not institutions or accredited investors. While a private lender may offer similar property value based loans, because they are not accredited institutes may have steeper interest rates or poor lending practices. Accredited Hard Money Lenders in Phoenix, like Prime Plus Mortgages, are more trustworthy, because of their long-standing customer base and industry practices. Private money lenders can be hard to find since lots of scammers pose as hard money lenders online.
What Types Of Loans Do They Offer
Traditional Bank loans for real estate investments can vary. A conventional mortgage is simply a loan that private entities like banks or mortgage brokers offer for real estate investment purposes. Standard mortgage loans that conform to guidelines set by Fannie Mae or Freddie Mac. These loans are based on the user credit history and down payment ability for investment purchases. Banks are hesitant to offer additional loans to new investors, and an expected 20% of the purchase price will be expected for a down payment. To get approved for a standard mortgage can take up to two weeks, which in real estate investing world feels like forever.
Private money investors offer loans on their real estate investments they think will turn a good profit. When it comes to a private money loan’s down payment, private lenders typically like the borrower to put down anywhere between 10-20% of the property value. This protects private lenders from defaults. Funding for private lending can take anywhere from 3-10 days.
Hard Money lenders in Phoenix offer a variety of real estate investments loans. Some of the loans they offer are Fix and flip, home rehab, bridge loans or short sale loans, even refinancing! They determine the loan value by calculating the property value and after repair value planned for the investment. When applying for a hard money loan, the lender will want to see photos of the intended property and upgrade plans, so they can give you the loan you need.
Where to find them
Traditional lenders are fairly easy to find! Walk into any large bank and you make an appointment for your real estate loan and review. Whether or not you get approved is another story! You may be able to get approved, but it can take almost 2 weeks to get a definitive answer, and they are weary of lending real estate investors.
Private money lenders can be found on almost any social media site, posting often in groups about their rates. The problem with private money lenders is that there are a lot of scams. (Read more about how to avoid private money scams here) It can take a while to sort through and make sure that the lender you are speaking to is the real deal.
Hard money lenders in Phoenix, are easy to find, and because they are institutionalized, you don’t have to worry about scammers or shady business practices. Prime Plus mortgages is the best hard money lender in Phoenix, with low rates, and a quick and easy approval and funding process. Prime Plus Mortgages Makes the loans for real estate investors and the specific instances they run across. Learn more about our hard money loans here!