Beware of Hard Money Lenders With Bank Like Requirements
Avoid hard money lenders with bank-like requirements and bank-like sluggishness. When you want a hard money loan, you’re thinking speed, less hassle, and asset-based lending.
Many hard money lenders have strict requirements like banks, and move as slow as a tortoise!
Why pay the higher interest rates associated with hard money loans if your lender acts just like your banker?
Forget about it! If you are working with a lender like this, find another hard money lender!
Watch the video and see why
This is Corey Dutton, I’m a private money lender, and today I’m going to talk to you about hard money lenders that act like banks.
These are the type of hard money lenders that you just want to avoid! A hard money loan is called such because it’s an asset-based loan against a “hard asset,” and a hard asset is any asset that can be liquidated fairly quickly for cash.
So, you go out seeking a hard money loan and you expect 3 things: #1, You Expect Speed, #2, You Expect Low Documentation Requirements, and #3, You Expect a Loan that’s an “Asset-based” loan, e.g. the real estate.
So what I’m trying to tell you today, the lesson learned from this video is, look out for hard money lenders with requirements like a bank and tortoise-like slowness in closing your loan!
Requirements For A Hard Money Loan
The first thing you want to look at is their “list of requirements.” What are they? Are they a mile long, or are they really small, something that you can say, “this is great! This is kind of what I’m expecting” Beware of heavy documentation requirements.
The second red flag to look out for is a lender, a hard money lender, that’s looking for an appraisal. Now an appraisal isn’t necessarily a bad thing, but if you need to close your loan quickly, an appraisal could delay you by several weeks.
Find out how your Hard Money Lender is planning on valuing your property. Are they using an appraisal? And if they, are what is the cost and the turnaround time to get that appraisal back?
If you have to close next week, the likelihood of you fulfilling that requirement of getting that appraisal with the lender in time for your closing? Probably not going to happen.
The Lender Keeps Asking For More
And then the third thing that I want you to look out for is a lender that is scrutinizing every aspect of the loan, but really not paying attention too much to the asset.
A good example of this is a lender that just keeps coming back to you for one more documentation requirement after another.
Another example is a hard money lender that has unreasonable requirements. You know we talked about low documentation requirements, we talked about speed, we talked about something “hassle-free” something “asset-based,” right?
There’s a lot of hard money lenders out there that are online, that are fairly well-known, that you’re going to go to for a hard money loan and you’re going to find out that they are underwriting your loan exactly like a bank and their speed of funding is as slow as a banks’.
So what do you do when that happens? Find another hard money lender folks, don’t spend too much time, don’t waste too much time, with a hard money lender that’s not a true asset-based lender.
That’s the lesson learned here! Find a hard money lender that’s a true asset-based lender, that has low documentation requirements, that has a high speed of funding, and looks at the asset as the primary means of approving or denying your loan.
This is Corey Dutton, I’m a private money lender, and if you like this video please like it. If you have any questions, leave them in the comments section below.