FAQ About Hard Money Loans And Other Tips
In a previous post of ours, we talked about common myths that some people believe and others like to peddle about private hard money loans. It probably comes as no surprise that we at Abbey Mortgage & Investments, as a private hard money lender, felt the need to dispel and debunk a good portion of these falsehoods. We discussed myths that hard money loans are only for people desperate for cash, hard money loans not requiring any cash flow or even a legitimate exit strategy, and other claims that we proved as not accurate.
In today’s post, we will continue discussing hard money loans in Colorado, as we’ve only started scratching the surface when it comes to all of the information out there about this topic. We want our prospective clients and partners are well informed regarding their investment options at Abbey Mortgage & Investments. The reason for this is simple. If you do well, we do well. In fact, one of the other myths that we successfully busted was one that has circulated a fair amount online. It’s that private hard money lenders make their profits off of seizing a borrower’s property, and beyond that, private lenders want borrowers to default. We can say this couldn’t be further from the truth. We make our money off money invested, as opposed to the borrower who makes money from the cash flow of the property. While no two loans alike, we yet again wanted to address this, as it’s a foundational precept when someone is considering getting a hard money loan.
At Abbey Mortgage & Investments, we have a passion for doing business the right way. With over 20 years of experience in Colorado, we’ve helped people in communities that include Denver, Arvada, Boulder, Colorado Springs, Fort Collins, Berthoud, Windsor, Longmont, Wheat Ridge, and many more. Later on this post, we’ll talk about our hard loan specialist, Robert Kearney, and what he can do for you. But for now, let’s address some frequently asked questions about hard money financing and the like!
Private Money Loan FAQ
Why Is It Called Hard Money?
Excellent question, readers, we are glad you asked! Hard money is associated with being “hard to get” on some level, at least in terms of getting a loan from the bank. We agree that banks typically aren’t able to do what we do as a private money lender. Even if they can approve you for a loan, loans take 90 days or more to approve, and sometimes longer. Weigh that against the time-sensitive, efficient service of Abbey Mortgage & Investments, which usually takes just a few weeks, and you begin to understand one of the chief benefits of going with a private money lender.
Speaking of the term “private money lender,” that term is used interchangeably with a hard money lender, with a particular focus on professional lenders, like we are at Abbey Mortgage & Investments. Private parties who fund loans are not recognized as part of this category.
How Do Borrowers Generate Money For The Loan?
Another great question. Broadly speaking, private hard money borrowers are private parties who need money to seek down-the-road ROI on their capital invested. Now the source of these funds is subject to change on a case-by-case basis. It could be an individual with real estate, a group of investors who have pooled their funds to achieve the same goal.
Why Can’t I Go The Traditional Route And Use A National Bank?
You are welcome to try, as many national banks can offer a lower interest rate. But the common pitfall here is twofold. First, approval for a loan might be difficult for certain parties, even if it has nothing to do with a credit score. There are some types of investments that banks have an aversion to, which creates a place in the market for hard money lenders, so we can’t complain too much about that. The second reason is that while a national bank may eventually approve you for the loan you seek, it might be six months down the line, or even more. As a savvy investor, you already know that windows of opportunity, especially in real estate, are tight. Getting actionable capital in a matter of weeks instead of months can be the difference between making or breaking a deal.
Speaking Of Credit Scores, What If I Have Bad Credit? Could I Still Get Approved?
Having a quality credit score is positive in general, but having poor credit doesn’t exclude you from getting approved for a private money loan. It works this way because the loan is based more on collateral versus credit score, as our emphasis is on the property you put forth as equity. You can see this is an obvious advantage for hard money loans.
Will I Need An Appraisal On My Property?
Like many answers in life, the answer is “it depends”. That answer is mostly contingent upon the loan to value ratio (LTV) and how unique the property itself is. If we have a good feel for the LTV, we can skip this step at Abbey Mortgage & Investments by checking on comparable real estate. We are creative and dedicated here, so anything we can do to accelerate the process securely will be our priority.
What Are Other Benefits There To Securing A Hard Money Loan?
This might be the best question of the lot and what this hard money faq is all about. The advantages are numerous. For starters, there is less paperwork and fewer hoops to jump through, which means you can get funding in 5-10 days. Another that we’ve already touched on is the fact that there is much less personal financial scrutiny that comes into the equation with a private money loan. This allows you to focus on your business and your investments rather than trying to control past financial issues like you might be doing when applying for a bank loan. Finally, we aren’t concerned that you are self-employed, should that be the case. We are concerned with the equity associated with your property and if it is a viable investment. Most banks get hung up on irrelevant details like that when it ultimately has nothing to do with the likelihood of success on the hard money loan.
What Can Robert Kearny At Abbey Mortgage & Investments Do For Me?
We spoke too soon and here is the best reason. Robert Kearny is our hard money loan expert here at Abbey Mortgage & Investments. With a wealth of experience and knowledge in the field, he has worked on projects ranging from construction management, property zoning and rezoning, lending, property investments, workouts, development, rehabilitation, and many more. Having someone like Robert on your side can make a massive difference.
Choose Abbey Mortgage & Investments
Like our entire staff at Abbey Mortgage & Investments, we have a passion for getting you an efficient and creative solution that is a win-win for both parties. Our success is contingent upon yours at the end of the day. If you are looking for loan assistance from outside-the-box thinkers who are flat-out excellent at what they do, you know who to call. Reach out to us today so we can help you meet your investment goals. Our friendly and professional staff would love to meet you.
You can also check some of our other articles out.