When it comes to hard money financing, you might get intimidated when talking to a lender and not always knowing the right questions to ask. Lenders are there to help you with your current financial situation and guide you through the financing options that are best for you. Hard money loans allow more borrowers to participate since they are easier to obtain than traditional bank loans. If you are thinking about getting a hard money loan, we have 5 Questions to Ensure Success with Hard Money Financing that you need to know before applying for your loan.
Hard Money Financing Question #1: How Will Your Monthly Loan Payment Be Made?
This is the most important question that you need to ask yourself before acquiring your hard money loan. In order to get qualified for the loan you will have to use equity in your property for collateral. It is important to make sure you have a plan in place for making your monthly payments because you could lose your property if you don't make your payments on time.
Hard Money Financing Question #2: How Does Your Credit Look?
If you have issues on your credit report that you need to get resolved, make sure you try to get those fixed before obtaining your loan. This is important because your credit score plays a huge part in figuring out what interest rate you will be charged for your loan. The better your credit score is, the lower your interest rate will be.
Hard Money Financing Question #3: What Return Will You Earn?
Make sure your investment return is larger than the interest rate on your loan if you are planning to use it for a business or investment opportunity. If your investment return is lower than the interest rate it will result in a negative real return.
Hard Money Financing Question #4: What Is Your Exit Strategy?
Hard money loans are short term so you need to ask yourself how you are planning on paying the loan off in 12 months, since that is the typical length of a hard money loan.
Hard Money Financing Question #5: Who Exactly Are You Working With?
If you want to make sure your loan falls into the confines of the law you will want to work with an experienced Hard Money Lender. Make sure you do your research on the lenders you are interested in working with and request client testimonials from those lenders.
Get in contact with the lender that you have chosen to request an interest rate quote if you have made the decision that a hard money loan is the right option for you. At Trust Deed Capital we are committed to helping investors and borrowers with their financing options. If you haven't figured out what lender you would like to use for your hard money loan please contact us and we would be happy to serve you and help you get started.