After deciding for this loan he moved forward with that lender for processing. They actually got all the information from my friend by setting him for a bunch of paper work. He wanted some Tax Returns and Bank Statements and said we will give you some bank statements as well. So my friend worked through all the documentation that has been requested while thinking this is a lot of work to get done for this loan. They thought hey if they can get us what we are looking forward, now they feel.
So finally they came down to the day of closing. When they showed up at the closing table, they found out that everything full of promise wasn’t actually what was delivered. First thing he found in closing documents is out that his loan WASN’T a Hard Money Loan. He further found out that it was actually a Portfolio Loan and it means his loan was going to be packaged and sold out. The lender actually approved a traditional loan for him which as you know is going to affect his credit score. If he close on a traditional loan and pay them off in a couple of months, it was going to have a bearing on his credit scores and a few other similar things.
They also did a traditional loan and closing out several times. It looks really bad on the lenders and lenders don’t want to loan to you ever again and it has effects on credit score. So my friend showed up the closing table and he was very upset and he chose not to close on the loan and that’s when he became my client as well because he want to choose Hard Money Loans and we actually were able to provide the financing at that time and he was able to close on loan. See! There was 100% financing. It was not at all going to affect his credit scores as long as he paid us off so we moved forward.
So, I think moral of story is, first of all hard money lenders are not graded equal just like not all hard money loans can be graded equally. Secondly, I think it is important to realize that several times we hear stories about people going to the closing table expecting to close on a loan and buyer never makes and the lender that they are consulting for hard money loans is seem impossible to be found and never to be called nor they reply back on any of your phone calls. So, I think it is really important that you, as a real estate investor, are working with a hard money lender that has a good reputation; a physical website presence and a physical office presence just like Hard money lenders Arizona. If this does not happen actually then you may have a problem. We have been discussed about hard money lenders and getting loans against real estate and some of the pitfalls and making sure that loan you are getting is actually a loan that you want. Happy Investing!
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