Making your way into the real estate industry can be challenging. One of the difficulties to overcome is finding the funds to finance your early real estate deals. This is where a hard money lender can benefit you and help you achieve your long-term goals. But you need to be careful when searching for a hard money lender to ensure you get exactly what you need. Here are some characteristics to avoid in a hard money lender.
Hidden or Upfront Fees
There are fees associated with taking out a loan, even a hard money loan. But fees aren’t a red flag in and of themselves. What you need to be wary of with a hard money lender is paying money upfront before your loan is approved. In addition, you need to be cautious about paying a fee to get the money you’ve been approved for. You should know the fees they may charge you for late payments or other things to be sure you can afford them and that they’re not unreasonable based on the amount you’re borrowing.
Hidden fees are those you aren’t aware of until they’re due, so they can be difficult to identify. Make sure you carefully read all paperwork associated with a hard money loan and ask questions about any fees or terms that don’t make sense to you before signing anything.
Lack of Communication
Communication is key to making any partnership work, including the one you form with a hard money lender. If you’re having trouble getting a hold of your hard money lender or they don’t answer your questions clearly or promptly, you may want to find another lender. A lack of effective communication can create problems and make it challenging to agree on terms. Additionally, when it’s difficult to communicate with someone before you’ve received your loan, it may become even more challenging as the relationship continues.
A local hard money lender is often the best choice because you can get in touch with them easily. A local lender is also beneficial since they have knowledge of the area and can guide you in your investments. The team at Titan Funding is always ready to help you take your real estate investing to the next level. Contact us to find out how we can help you reach your real estate investing goals.
Changes in Terms
Once you’ve agreed on the loan terms with your hard money lender, they should retain the terms throughout the contract. Be on high alert if the money lender you’re working with tries to change the terms of your contract before or after you’ve signed anything. For instance, if you’ve discussed specific terms for your loan, but the lender shows up with a contract that outlines different terms, you may want to find someone else to work with. Be firm about what you need and want to ensure that you get the best deal for your circumstances.
While you can expect to pay more interest with a hard money loan than with a traditional loan, don’t be sucked into an exorbitant interest rate that you can’t afford. Researching before you approach a hard money lender can help ensure the interest rate they’re charging is in range with local competitors and the rest of the industry. If the hard money lender adjusts the interest rate before you sign, it could also be a warning that something isn’t right. Researching before entering a loan agreement gives you an understanding of what you’re getting into before applying for a hard money loan.
You’ll want to ensure that the lender has the funds you seek. Because hard money lenders range from single individuals with limited access to investment capital to large, well-funded companies, their lending abilities can differ significantly. You’ll want to ensure the lender is a good fit for your investing needs.
Little to No Experience
In any industry, the more experience you have, the better you can do your job. It’s no different for hard money lending. Working with someone with experience will ensure your loan is effective in helping you reach your investment goals. If the lender you’re working with lacks experience, it’s possible they will make mistakes. This can cause many issues with your investment plans, and you can potentially lose money in the long run.
In choosing to work with Titan Funding, you’re putting decades of experience behind you. Our team has the knowledge to help you advance your real estate goals and the capital to provide you with the loan you need.
Tips for Finding the Right Hard Money Lender
When searching for the right hard money lender for your unique circumstances, consider these helpful tips:
Meet Them in Person
Set up a time to meet your hard money lender in person. A face-to-face meeting can help you get to know them and learn more about how they can help you. If you don’t get a good feeling from the meeting or something doesn’t seem right about the deal, you may want to seek another lender.
During your meeting, ask the lender questions. If they don’t seem to have a lot of answers or their responses don’t seem accurate or trustworthy, consider continuing your search for hard money elsewhere. A lender that doesn’t have answers is more likely to provide information that isn’t true or lead you astray about your loan and its terms.
Get recommendations from friends and other investors about the best hard money lenders in your area. This could be the best way to find a lender to help you get the funding you need. Knowing someone who has successfully worked with a company can speak louder to a lender’s credit than anything else.
Are you interested in getting a hard money loan from a reliable company with decades of experience? Then get in touch with the team at Titan Funding. We can help you achieve all your real estate investing goals.