Signs You Need to Switch Your Alternative Real Estate Lender

Signs You Need to Switch Your Alternative Real Estate Lender

People that have been conducting property deals know the benefits and drawbacks for sticking with one lender for too long. Loyalty in business dealings has its perks but you need to be looking out for your interests—sticking to your lender can be costing you. Switching your loan lender can be more profitable for you. Their product offerings may be better suited to your needs and loan approvals may take shorter time. To determine whether it’s time to switch loans, ask yourself if your needs are being met. How long does loan approval take? Would it be better for you if loans were approved faster? Is your business being slowed down due to lagging loan approvals? If you’re current lender is proving to be an inconvenience in your business, it’s best to look for a new lender. The greatest benefit of private loans over loans given by banks is that they provide more flexibility and quicker service. Generally, private loan offer a win-win situation for both the lender and the borrower. Consider the following factors: Flexible Financing Solutions These are required for a range of portfolio projects. Loans taken out from traditional lenders don’t require much flexibility but by opting for a private money loan, you have access to a much larger, more diverse pool of lenders who are more accommodating to the unique needs of borrowers. Don’t settle for a lender that isn’t adequately meeting your needs when you can be matched with a lender that’s willing to provide added flexibility. Transparency Communication is imperative in property deals since your ability to make profit is so dependent on the...
Understanding the Costs of a Hard Money Loan

Understanding the Costs of a Hard Money Loan

Those who’re looking to refurbish worn out property and sell it for profit can use hard money loans to finance those projects. Companies that offer hard money loans gather private investors who want high-interests on the funds they provide and rehab borrowers that fix and flip properties. Generally, when the real-estate market is improving, there is a splurge of rehabbers who turn to hard money loans to fund projects. How do Hard Money Loans Work Hard money loans are offered on a short-term period; they usually run for 6-24 months. Before the loan period ends, the borrower is expected to make a balloon payment that consists of the interest amount and the principal too. The funding received from hard money loans covers 60-80% of the final value of the property after repairs have been made. Compared to conventional loans, hard money loans have higher interest rates along with greater lender fees and extra charges. There are two cost-components you’ll need to consider in hard money loans: interest rates and up-front points. Interest Rates As mentioned above, interest rates on hard money loans are substantially higher than on loans that are given by traditional institutions. Because hard money loan lenders are taking a greater risk by offering a large sum of money, they require a larger amount of interest in return—the larger the loan, the greater the interest. Hard money loans usually start at an interest rate of 7%; on average, they are offered with a 10% interest rate but this can increase depending on how big the financial risk is. Up-Front Points When it comes to hard money loans,...