What Hard Money Lenders Arizona Need to Know

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Mortgage and Lending with Level 4 Funding NMLS 1018071 AZMB 0923961

Hard money is a great way to fund your next real estate investment. But to secure the loan you will need to know what hard money lenders Arizona need to know about your deal.

Everyone knows that when you approach a bank or mortgage company for a loan, you are going to be required to complete a huge pile of applications and forms. In addition, there will be many other documents that you will be required to submit with your application such as bank statements, tax returns, other loan documents and earnings statements. But applying for a hard money loan is an entirely different process. Hard money lenders Arizona will not need all of that detailed personal and financial information. Instead, there is a fairly simple list of information that hard money lenders Arizona will request.

The most important questions that the hard money lender will want answer all pertain to the property being purchased because that is going to be the collateral for the loan. They will want to know if the property is residential, commercial, industrial or unimproved land. They will also want to have your estimate of the value of the property. It is best to be fairly conservative when supplying this number. In addition, have a few comparable properties in the area and their values to help support your estimate.

Next, the lender is going to want to know how much you have available for the down payment. A hard money lender is normally going to want to see at least 20% to 35% put down on the property. There are a few reasons for this rather substantial down payment. The first is that the lender wants to be certain that the property value remains greater than the balance of the loan at all times. Even if there is a slight downturn in property values, the lender wants the value of the collateral to always be greater than the loan balance. In addition, it is a common belief that a borrower will work harder to be successful if some of their own money is tied up in the investment property. So your “skin in the game” is your added motivation to make the deal work and repay the loan.

The Loan Amount

The lender will also ask you how much money you would like to borrow. This lets the lender know that you have an understanding of the loan to value of the property and also that you have realistic expectations. Asking for more than 70% of the price of the property could tell the lender that you are inexperienced and might not be a good risk.

Where Will the Payments Be Coming From

Finally, and maybe most importantly, hard money lenders Arizona will want to know how you plan to make the loan payments. Is the property going to be generating income to make the loan payments? Do you have enough income to make the payments? And can you continue to make the payments until you are ready to sell the property? In the end, the lender want to be assured of recovering their investment in you and they would prefer to have the cash and not foreclose on the collateral property.

 

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC 
Private Hard Money Lender
Arizona Office:  (623) 582-4444
dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027

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