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Hard Money: An avenue for New and Prospective Clients

Hard money can be a great lending tool that most residential mortgage originators aren’t aware of. Some might confuse it with predatory loans, but hard money lenders support the development of real estate and aren’t difficult to deal with these days.






Hard money can be used in the construction of single-family homes and as a rescue remedy for residential loans that have fallen due to low credit scores. Given that hard money is used when securing short-term loans, originators prefer using the hard money on the front-end closing for any long-term loans.

Insights on local lending

To partner with investors, it's essential to source a reliable hard money lender. You can do this by trying to source locally since there are great benefits you can incur from working with someone local to finance your projects. Also, you must develop a close relationship with your lender since they play a huge role in their underwriting. In a case where you have a limited budget issue, it's easier to work out a solution with them, given that they operate as a national lender compared to a mom-and-pop shop.

Local lenders can help homeowners to close a deal more quickly without raising red flags, but they still pose some disadvantages. One of the downsides is that they sometimes run out of funding, which is not the case with national lenders who have institutional backing. For those new to single-family investment, you must find your local area real estate investors club online.

The funding question

When you meet them, you should ask any money lenders how they get their funding. People make assumptions about where to source cash, but it's essential to understand whether you are dealing with a privately funded lender. Those who might not be privately funded will most likely be using banks or other financial institutions, which is an easy way of saying they have a lot of money. 

Originators know that when clients are handed over to complicated lenders, such borrowers can't trust the vetting process and would seek other alternative options the next time they need a loan. 


 



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