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Last Updated: May 14th, 2012 - 22:24:01 |
Hard Money Lenders are in the business of providing loans and loan services to people who require hard money loans (loans collateralized by real estate.) Hard money lenders may be direct hard money lenders or hard money brokers. Most hard money lenders are, in actuality brokers. Some hard money lenders are both brokers and direct lenders. In these cases, the hard money lender generally funds one or up to a few small loans per year and serves in the broker capacity to clients for the balance of loans the help to originate.
Choosing whether to work with a hard money broker or a hard money lender is much like selecting whether to purchase real estate with the assistance of a broker or whether to make an offer direct to the seller on your own.
Working With A Direct Lender
The advantages of working directly with a true hard money lender are immediately evident: you save money by going direct. Brokers are paid for their services via a percentage of the points you pay on a hard money loan. Therefore, the more brokers involved in a deal, the more you are likely to pay in both points and percentage to accommodate that cost.
If you have selected a direct hard money lender who is a good match for your project, you will be able to speak directly with the decision makers, avoiding the ‘run around?that so many hard money borrowers fall prey to. You hear that your loan is going through, only to be told the next day that the lender has elected not to take on your hard money loan and now your loan is on another desk in yet another direct lender’s office ?or worse, on the desk of another broker who may know a broker who knows a lender who may want to fund your loan. Sometimes, the choice of direct lender is based more on the commission the broker will get than on your best interests.
By working with a direct hard money lender, you can avoid the ‘run-around?and may be able to close more rapidly. After all, no one knows your situation like you do, no one can explain any extenuating circumstances better than you can, and no one is as committed to your business and your hard money loan as you are.
Working With a Broker
The advantage of working with a broker is also clear: a seasoned, well-informed, honest broker will have the knowledge of and access to the dozen or so direct hard money lenders in the US and will know where your loan has the best fit. A good broker will help you ‘package?your loan to your best advantage, sharing information with you that will help you determine how much to expect based on the equity in your property, type of property you are collateralizing, the speed with which you need to close, and more. A good broker will be able to help you complete the lengthy application and ‘float?it to the best direct lenders for your situation. This may save you time and trouble in the long run and be well worth the 2-3% fee.
In the end, your choice to work with a hard money broker or directly with a hard money lender will depend on whether you have access to a direct hard money lender and whether you are prepared to discuss your project directly with the decision makers. If you have a project you'd like this direct hard money lender (Avatar) to look at, please contact us at 888 886 0097 or apply for a loan online.
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