So, you work hard, you find a GREAT property, and then you think, now what do I do? So, you look online and find something called a “Hard Money Lender”. Well, that is all well and good, but if you find the wrong Hard Money Lender, you could find yourself caught in the pitfalls of Hard Money Lenders!
Let me explain. A while back a couple found a property and wanted to fund it with a short term equity loan. They wanted this type of loan, because they were trying to avoid affecting their credit scores for whatever reason. They searched out a Hard Money Lender. He gave them a great song and dance and told them that he could provide funding and it wouldn’t go on their credit score as long as they paid off their loan. That was JUST what they wanted to hear.
So, through the process, he began to ask for information. Now, this is uncommon with Hard Money Lenders that they will ask for information. But you should know that you are looking for an equity based loan. What does that mean to you? That means that the Hard Money should be basing their loan on the PROPERTY not the person. So, getting back to my story. He asked them for bank statements, tax returns, proof of income, etc. They thought this unusual, but provided this information to him anyway.
It then came time for closing. As they sat at the closing table, they found that the loan wasn’t a hard money loan at all. He had decided to work with the banks and instead get them a Portfolio Loan, a loan that was going to be packaged and sold out. This was going to go on their credit; it was going through the banks! That was why he needed all of that paperwork.
Needless to say, the couple was VERY upset. They decided not to go through with the loan. And immediately began searching for another Hard Money Lender. That was they came upon DoHardMoney.com. We provided the loan to them at a 100% financed.
Now, some thoughts on this story: One, not all hard money lenders are graded equally. Two, it is important to realize that often we hear stories about people going to the closing table expecting to close on a loan and the parties do not show up . . . INCLUDING the lender. You want to make sure you are working with a hard money lender that has a good reputation, which has a physical website presence and has a physical office presence. Make sure that they operate as a reputable company and not just some guy with extra money in his pocket because you are always going to run into problems.
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