Finding the right property to flip is a challenge in itself, but so is finding a good deal on a flip loan. One thing to consider when shopping around for a loan is that old saying – If it sounds too good to be true, it probably isn’t. As with other areas of life, it’s important to use our intuition and look for red flags when it comes to securing a hard money loan in Arizona, especially when you consider the small room for error with a house flipping property. For this reason, after you find the perfect property to flip, be sure you go with a lender who is upfront about the terms of the loan, and know what red flags to look for so you don’t get scammed and end up paying more on the loan than you expected.
The Lender Should be Eager to Disclose Everything
A hard money lender doesn’t want to waste their time with a borrower who isn’t serious. For this reason, legitimate lenders are typically eager to be upfront about their lending terms and any fees they charge. They do this because they want to be sure you can afford the loan they’ve put in place. If you can’t, you’ll walk away, and they can move on to the next customer. On the other hand, if a lender is not willing to be upfront about terms and fees, especially in writing, then you can be sure they are trying to scam you. A lender should be giving you a written document that contains a list of all their terms and fees. If there is no document or the one they give you doesn’t make sense, move on to a legitimate lender who will be upfront and honest about the hard money loan they’re offering.
Get a Copy of the Loan
Any bank you walk into for a loan, whether it be for a car, a house, or just a personal loan, will go over all the details in writing, and give you a signed copy of the loan that includes all the minute details. When you’re working with a hard money lender in Arizona to secure a house flipping property, you should expect the same action. Therefore, if a lender doesn’t want to give you a copy of the loan or says you don’t need it, then this is a red flag that something is wrong and you shouldn’t sign the document. In a case like this, you can be certain the lender has hidden fees they don’t want you to know about. Also, before you sign any loan document for a hard money loan, it would be wise to first have it reviewed by a professional, especially if you are not familiar with this type of loan and its terminology.
Is Your Potential Lender Helpful?
This is a great question to ask yourself. If the answer is no, you can be sure this is another red flag and you should turn around and go in the other direction. You want to work with a lender who eagerly answers your questions, is easy to contact, and returns your calls and emails in a timely manner. If the lender is not behaving this way during the loan process, then you can expect them to act this way after you sign the dotted line. If this is the case, it’s time to quickly move on to a lender who provides excellent customer service. Remember, there may be other bids on the property you want and you can’t waste your time with a lender who doesn’t call you back.