Finding the best lender could be a bit difficult job, but if you follow the tips below this task will be a bit easier. These tips will help you to find a good and the most appropriate lender for your business.
Locate the best lender
It is very important to that you do not allow your desperation to lead you into bad decision and inappropriate deals with hard money lenders. While you are in desire situation, you should do online search to find the best lenders for your needs. If you are rushed out for time, you will discover that you are paying for a loan that is nowhere near value for money and there are plenty of bad deals in the market. However there are still some honest hard money lenders around the town offering affordable rates, you still need to search for them.
A non-recourse loan
When you are doing research you will discover that there are two types of lenders available to you: the recourse loan and the non recourse loan. If you opt for the recourse loan you will be putting yourself in danger as the hard money lenders will be able to repossess your house if you are unable to repay them. Furthermore, they will also be able to take legal action against you and surely you will.
However in non-recourse loan does not allow to take legal action if you are not able to pay, but the lender is still able to reprocess your house. Non-recourse loan is favorable and you should check which loan you are opting for the before signing the contract. Do not be conned into losing more money than you owe.
While searching for hard money lenders, you will also come across the term ‘points on a loan’. A point is worth 1% of the overall mortgage amount, which means one point on a $ one million is equivalent to $10,000. Usually hard money lenders will offer loans between four and eight points. So it is unlikely you will ever find a loan that is offering one point. You should always search for loans with lower points, the less you will have to pay in the long-term. It is advised to that you stay below five points otherwise you will be swamped with the costly and unforeseen fees!
Know your terms
It is crucial that you know what you are signing up for and be sure that you are aware of all the terms in contract. There will be lenders who create loan structures designed intentionally to fail, particularly those with interest-only or the adjustable rates, you have to know how to identify these. You must also be sure of the exact amount that you will be paying immediately and over the duration of the loan. If a contract is open to change, it is unlikely to be beneficial and should be avoided at all costs. If the amount is constant, there is a possibility that the price may expand quickly and ultimately become huge to repay.