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Hard Money 101: If it sounds too good to be true, it usually is!
Among the dozens of viable loan candidates I correspond with each month, there’s one statement that always makes me cringe: “Lender X says he’ll do the loan without seeing the property and on better terms than your lender.”
My response is almost always the same: If it sounds too good to be true it usually…no, it always is.
Sadly, in this day in age there are an increasing number of both local and national “hard money” lenders that are more in the business of real estate acquisition then they are real estate lending. Many of these so-called “better options” that borrowers believe they’ve found are actually veiled attempts at one of two things:
1. an attempt by a broker, not a direct lender, to convince you they have a lender that is ready, willing and able to finance the transaction with surprisingly favorable terms and conditions to the borrower; or
2. an attempt by a “lender” to have you enter into a loan with them in haste only to then realize at closing that the loan terms and conditions are either not what was promised or destined to result in a borrower’s default.
Scenario #1 above is almost always an attempt to get ... more
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