When talking about real estate financing, there is a variety of choices come under the umbrella of real estate financing. It is quite significant for a real estate investor to understand all these types of real estate financing because only then you would be able to choose the right lender for money lending.
At first place I think you have the option of traditional lender. It may be a bank, or a credit union and they typically provide financing to homeowners and occasionally they will provide financing to investors. Now if they provide financing for an investor they are only going to flap an investor that has so many loans in their name and that changes. It has been as high as 10 as low as 3. But they are going to require you qualify for that loan based upon debt income, based upon job verification and based upon your experience. They will include some of the rental income if you have the property rented but they are also going to take out certain cost for that property. So you are going to get a decent interest rate with that and it is going to be a long term loan. Those types of lenders are going to record against your credit report.
Another type of lenders, I should say for those types of lenders they are not going to do anything fast. They are going to go through a long process. They are going to evaluate and scrutinize you, your job and the property. It is typically a 30-day process and in doing that they are going to have all kinds of documentation including blood and urine samples in most cases. They are questioning how long they can hold those.
The next type of real estate lender is called brokers who actually do not provide Hard Money Loans by themselves. A real estate broker is someone that actually does not have money when it comes to financing and more specifically real estate financing. So what they are going to do is they are going to take down all of your information, understand what you are looking for and then they are going to place your loan with a lender, a direct lender, that is willing to provide what you are looking for. Now the advantage of a real estate broker is that they are going to have more options than a direct lender.
The next type of lender you are going to have is a hard money lender or a soft money lender. Basically, what you are going to have is a hard money lender who is really not a hard money lender because they are borrower centric. He is looking at borrower’s credit score, income, job history and credit scores. So you might be able to find a soft money lender and they are typically going to take longer and they are typically going to sell your loan also to a secondary market but a different secondary market that is willing to take a higher risk type loans.
And when we talk about real estate financing; the next type of lender is a true hard money lender and the definition of a true hard money lender for real estate financing the one who is willing to lend based upon the value of the property not but the borrower’s personal qualifications. so they are going to look at the value of the property. They are going to look at what that property is going to be worth once it is fixed up when the repairs are done, what is the maximum amount of money that property is worth once repairs are done and what repairs will maximize that property in a conservative manner. They are not governed by different places that they are going to sell the paper to. It is typically their money or its private money. They have criteria which they have to follow. So when we talk about real estate financing and more specifically about Hard Money Lenders Arizona we have gone through the whole array all the way from direct lenders to the hard money lender and in between and I just want to bring up different types of real estate financing that is out there so that you can make a better decision as a real estate investor.
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