Things to Consider Before Choosing a Private Money Lender
Hard money lenders come handy when borrowing money from regular financial institutions becomes impossible. Hard money loans are usually more convenient, too. Such type of borrowing can be risky, especially when working with an untrustworthy lender. It is advisable not to work with just any provider. Researching well before making a move is important. How do you choose such a provider?
Credibility and expertise are among the primary factors to consider. Choose among transparent lenders. To be on the safe side, ensure that they are licensed to offer such services. They should also be licensed to operate in your state. Experience is important because it means convenience. Consider how long the providers have been in the industry. You should not overlook the reviews and testimonials they have from past clients.
The financial muscle of the lender is a basic factor to consider. This is integral, particularly if you need a large loan. A reliable lender would be willing to discuss their financial capability with you. Loan processing is important, as well. A lender may be able to offer the loan amount you need. If they cannot process it swiftly enough, however, choosing them would be a bad move. Make sure that they do not give you promises simply to sign you up.
What are their interest rates? The excitement of being approved for a loan should not cloud your judgment as far as interest rates are concerned. You should work only with a provider that would lend you the amount of money you need at an acceptable interest rate. Inquire whether the rates are fixed. This is because some lenders have variable interest rates. There is nothing wrong with the two types of rates, but variable rates can shoot up if the market conditions are unfavorable. It pays to compare rates across as many lenders as you can prior to choosing any.
It is important to inquire regarding repayment. Their repayment plan ought to be perfect for you. You ought to understand that hard money loans are never long term. This means that assuming that you would have all the time you need to repay the same would be a bad move. It is important to inquire about flexibility before committing. Get to know what would happen in case of late or missed repayments. Make certain that missing installments would not attract a stiff fine.
Documentation is a primary factor to give importance. Assuming that documentation is not important provided that the firm is credible would be a bad move. It is important to insist on documents that show that the money was disbursed as well the terms and conditions. Reading the document carefully is important to avoid falling prey to fraudulent lenders.