It can be challenging to get approved for a traditional loan, particularly in the current financial market. As a result, a lot of people are exploring the possibility of hard money lending, but there are a lot of myths and misconceptions that people have about this option.
The good news is that there are plenty of options available, and you can customize your loan package to meet your needs. What are a few of the most common misconceptions about hard money lending, and how can you find the right loan for your purposes?
Myth 1: The Interest Rates Are Always High
One of the most common reasons why people are so hesitant to consider a hard money loan is that they assume the interest rate is going to be high. It is true that there are some hard money loans that have higher interest rates than a traditional loan, but it is also true that there are hard money loans that may come with a lower interest rate than a traditional loan.
The only way you will know if you can secure a lower interest rate is to work with a hard money lender who can present you with your options. There are ways to qualify for a lower interest rate, such as putting more money down or providing collateral that you can attach to lower the risk associated with the loan.
Myth 2: It Takes a Long Time To Get Approved for a Loan
Like any other loan application, you will have to fill out some paperwork to see whether you are approved and what loan package you are approved for. When you apply for a hard money loan, we will ask you for some documentation; however, in many cases, we can provide you with a response faster than a traditional lender.
If you apply for a traditional mortgage, it could take several months to get approved for a loan, depending on your individual situation. Our goal is to close your loan as quickly as possible, giving you the cash you need for your next purchase. If you are operating on a tight schedule, reach out to us ahead of time and we will do everything we can to process your application in an expedited manner.
Myth 3: You Only Get a Hard Money Loan for a Risky Investment
It is true that there are a lot of people who apply for a hard money alone only after they have been rejected for a traditional loan; however, this does not necessarily mean that you can only go with a hard money alone if you have a risky investment. Indeed, we are proud to work with clients of all backgrounds, and even if you haven’t been turned down for a traditional loan, we would still be happy to process your application.
There are even situations where we will provide you with a loan for activities that a traditional lender might not. Therefore, our client base is simply more diverse. It does not necessarily mean that all of our investments are riskier.
Myth 4: Hard Money Lenders Apply Strict Rules To Their Loans
Another false misconception that people have about hard money loans is that their loan is going to come with a bunch of strings attached. Of course, we will ask you to sign a contract that will put you on a payment schedule, but in reality, we will provide you with more flexibility. If there are specific terms and conditions that you need to meet with your next loan package, we would be happy to customize it to meet your needs.
We will also review all of the rules with you before you sign on the dotted line, giving you plenty of opportunities to ask questions and get clarification before we finalize the contract. If you have concerns, bring them up ahead of time! We would be happy to make changes that will meet your needs.
Myth 5: You Have To Put Up All of Your Assets as Collateral
When people hear hard money loans, they often envision collateral. It is true that we may ask you to put up some collateral, but that is only because we want to provide you with a lower interest rate. When you put up collateral, you reduce the risk of the loan, which means we may be able to lower your interest rate as well.
In addition, we will never force you to use specific items or assets as collateral. We will always provide you with options for collateral, allowing you to decide what you want to put up as collateral and what you want to avoid. If there are specific assets that you do not want to use as collateral, you are in total control. You will not be forced to use them.
Myth 6: Hard Money Loans Are Too Confusing To Understand
There are a lot of people who are intimidated by hard money loans. They feel like they cannot understand them, and they may be worried that they don’t understand the information in the contract.
It is true that hard money loans might not be as mainstream as traditional options, but we are confident that once we explain your hard money loan to you, you will understand exactly what you are agreeing to. We always use language that is easy to understand, and we are here to answer your questions. The best way to overcome this confusion is to sit down with us to discuss your options.
Schedule an Appointment With Hard Money Lenders Arizona Today To Discuss Your Loan Options
Now that we have dispelled some of the most common myths surrounding hard money loans, we would love to review your options with you. At Hard Money Lenders Arizona, we are proud to work with clients of all backgrounds, and we can discuss your loan options with you as well. Give us a call today to schedule an appointment with our team, and let us help you secure financing for your next project.