A hard money loan provides a quick-fix for the house flipper searching for capital to fund their real estate investment project, and high-returns for the investor of the hard money loan.

But how does this whole hard money lending process work from beginning to end? Is it complicated or easy? What is the rate of returns for investors? How easy is it for a borrower to get their highly-anticipated approval?

Getting Started with Hard Money Loans – The Borrower

Before applying for a hard money loan, you’ll want to learn the pre-requisites of the lender. If you meet these pre-requisites, you’ll apply. If you’re a contractor in need of funding to flip a house, you’ll want to have a contract established for the project before applying for the hard money loan.

When you apply for the loan, the lender will carefully go over your application information and have the property in question appraised. It is a possibility that escrow documents may be required for paperwork verification.

The lender will then either approve or disapprove of your loan. If you get the approval, you’ll then close on the loan under specified lender terms.

Getting Started with Hard Money Lending – The Investor

There is a lot of flexibility in hard money lending for investors with less red tape. There is no conforming to specified underwriting requirements and your primary interest is in your return-on-investment and the safety of your capital.

The safety of your capital is why it’s of utmost importance to appraise the collateral of your borrowers. Before approving a borrower loan request, you’ll carefully review the borrower’s application.

You’ll take note of their income, their ability to repay the loan, what the borrower needs the loan for, their credit worthiness, and their collateral. You’ll then make an informative decision to either approve or disapprove the loan.

Once you’ve approved a loan, you’ll then read and sign any necessary forms. Your signed forms and the funds that you’re supplying to the borrower are then sent to escrow.

You’ll soon receive the closed loan package and monthly interest checks. You also have the ability to monitor payments by signing into your investor account. Average rate of returns for investors can range from 9% to 12% with Trust Deed Capital.

Whether you’re a borrower or an investor, if you’d like to learn more about hard money lending with Trust Deed Capital, contact us today.