Tag Archives: hard money arizona construction loans

HELPING YOU UNDERSTAND ARIZONA HARD MONEY LENDING

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iStock_000002512608_LargeWhat exactly is an Arizona hard money lender? How are they different from a traditional bank loan? How can they help you?

You have heard the term, “Arizona hard money lender.” But, do you actually know what one is? Arizona hard money loans are asset-based loans. With this type of loan a borrower must have property that will secure the loan. A traditional bank loan can be a grueling, time consuming project; and you may have to wait a long period of time for approval. Also, with traditional bank loans, your credit is of utmost importance. There is no elaborate underwriting when it comes to these loans so developers find them useful for time-sensitive projects.

Arizona hard money loans are primarily used for short duration projects. These types of loans are typically used for purchasing real estate, improvements, renovations and construction. There are a variety of other reasons for these loans. Most reasons involve some type of improvement that will add value to a property.

Hard Money Lenders Approach

Arizona hard money lenders are more concerned with collateral; unlike traditional banks who routinely dig deep into a borrowers credit. The value of your collateral gives the lender security; it is more important than your financial situation. If you are unable to repay the lender they can take your collateral, sell it and get their money back. Lenders will lend the borrower as much as their property is worth based on the loan-to-value (LTV). The lender determines this by the ratio of the loan amount divided by the value of the property. These lenders are able to make much quicker decisions because they don’t have to investigate your entire financial life. The loan will be a much shorter duration than a traditional loan, usually lasting between 6 months and three years. Arizona hard money loans typically charge a higher interest rate than a traditional loan, ranging from 10% to 18%. Arizona hard money lenders are able to help many borrowers who don’t have perfect credit; they can also help borrowers who are having financial issues such as bankruptcy. As long as you have collateral that can be used as security, these lenders can work with you. Also, due to the absence of a complex underwriting, lenders can work with a borrower on repayment schedules. The flexibility of these asset-based loans can save many hungry borrowers.

Things to consider when deciding if a traditional bank loan or finding an Arizona hard money lender will work best for you.

Working with Arizona hard money lenders will benefit borrowers that are working on a short duration project, may not have perfect credit (or have some marks on their credit) or need quick financing and own assets that will cover their obligation in case they are unable to repay on time. These lenders can be found in organizations that specifically offer these loans. If a non-conforming loan will not work for your situation you may find the funding, you require through a Arizona hard money lender.

Dennis Dahlber Broker Ri CEO Level 4 Funding LLC Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC 
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701 

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

© 2016 Level 4 Funding LLC. All Rights Reserved.
Copyright | Privacy Policy | *Terms & Conditions

HOW TO UNDERSTAND ARIZONA CONSTRUCTION LOANS

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4page_img5-bigBenefits of Arizona construction loans and how to understand them.

Home development is a pretty complex process. Taking out a loan can be a very complicated part of the process. What exactly is a construction loan? In essence a construction loan is short-term, interim loan for the construction of a house. The terms of a construction loan are usually a maximum repayment period of one year; and the rates on these loans are higher than traditional mortgage loans. They also have variable rates. A variable rate means the monthly payment will slide up and down with the prime lending rate.

There are two types of Arizona construction loans. The first is a construction-only loan. In this scenario the borrower takes out two separate loans. The first is exclusively for the construction of the loan. After you move into the completed home, you will take out a mortgage loan. A construction-only loan will not require a large down payment. If the borrower has limited cash flow, but knows their financial situation will improve after the sale of the home, this is a good choice.

The second type of construction loan is a construction-to-permanent loan. With this type of construction loan you borrow the funds for the construction of the home. Then, once the construction is complete, that loan is turned into a traditional permanent mortgage. When the borrower is approved they will follow a schedule of the construction of the home. During the construction of the home the borrower will typically make interest-only payments.

How to qualify for a Arizona construction loan

Gaining approval for a construction loan can be more difficult that qualifying for a traditional mortgage. When you have a traditional montage your home acts as an asset. In case of default, the bank can take your home for collateral. With a construction loan, the bank has nothing to seize because nothing has been built. So, what will you need to qualify for this type of loan? You will need to be prepared for a down payment up to 20%, a history of stable employment (income), have a low debt-to-income ration and impeccable credit. You will also need to gather pertinent information concerning your building plan. (This will be everything from the house size to what contractors will be employed to build the home). Lenders will want to know everything about the home there is to know. Very often, the lender will send an employee to check on the construction’s progress.

Are you eager to build a new home?

Be aware that Arizona construction loans can be more convoluted than traditional mortgages. It is necessary to look at many lenders to find out their expectations of the borrower; learn their rates and terms. There will be many lenders that do not want to work with this type of loan. Typically, credit unions and smaller banks will be more wiling to work with you. Be sure that before you shop around for a contractor you are pre-approved for a loan. Once you work with a contractor you will pay for blueprints and the design of the home. Wait until you know where your funds are coming from before diving into this project.


Dennis Dahlber Broker Ri CEO Level 4 Funding LLC Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC 
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701 

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

© 2016 Level 4 Funding LLC. All Rights Reserved.
Copyright | Privacy Policy | *Terms & Conditions

ARE THERE LENDERS THAT WILL APPROVE A LOAN WITH ONLY 10% DOWN

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iStock_000004311792XSmallWhat type of down payment do I need for a hard money loan?  Is a down payment required?

The answer is, no a down payment is not always required. However, there is a difference between needing your own money for a down payment and being prepared to use some of your own money towards your potential property. Certain lenders will require a certain percentage as a down payment— that percentage can be calculated from your credit score and/or your real estate investing experience. Don’t get nervous; Arizona hard money lenders are not as concerned about your credit as they are your hard assets. You DO NOT have to have perfect credit to be approved for a loan. Most Arizona hard money lenders will work with you if you have a FICO score of at least 550. However, depending on the lender, you may have to put a little more of your own money down. Lenders that require a down payment usually will ask for between 10%-20% down with decent credit and around 25%-30% for bad credit—remember this is SOME lenders.

The good news is there ARE lenders who will only require a 10% down payment (and you may find one that doesn’t require one at all—although, that may be prove to be a little more difficult). With only 10% down, you are looking at a lender that will fund your investment at 90%.

All lenders use a different underwriting process. Underwriting uses the criteria they gather from you to assess the lender’s risk. That criteria will determine if there is a down payment; or determine the total down payment. Regardless, of the process they use it will be a much more lenient process than a traditional bank loan.

Can I find an Arizona hard money lender that will fund 90% of my investment?

Absolutely! However, you will have to research for those lenders and find out their requirements. Arizona hard money lenders that ask for a down payment are doing so to lower their risk. Also, borrowers that have something to lose put extra effort into the project.

A lender may fund you 90%, leaving you with only 10% of the cash flow to produce. Keep in mind that many times a borrower may not have to put much money as a down payment, but will have a money gap. If there is a money gap you will need gap funding. Gap funding is the money needed to fund an endeavor that is not currently being provided by debt, cash or equity. Essentially, it’s a second mortgage on a fix-and-flip or rehab loan. You can get gap funding from a Arizona hard money lender, as well. Make sure when you meet with your lender you ask them about money gaps.

You can get into real estate investing with little or no money of your own.

It is possible to get a hard money loan with only 10% down. However, you must fully comprehend your circumstances and what tools will be necessary to make that happen. Find a lender that you feel comfortable with, set up a meeting, bring all your information and, most importantly, ask questions!


Dennis Dahlber Broker Ri CEO Level 4 Funding LLC Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC 
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701 

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

© 2016 Level 4 Funding LLC. All Rights Reserved.
Copyright | Privacy Policy | *Terms & Conditions

Arizona Construction Loans: How to Risk Less by Avoiding Extension Fees

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Brandon-Abney-Arizona-Home-Mortgage-FHA-Specialists-150x150If you are in the middle of building a house for yourself or you are in the middle of a renovation project, you need to know that with Arizona construction loans, there is an ugly little thing called extension fees. Learn why you want to avoid extension fees and some strategies to keep your project on track.

With construction projects, loans are distributed through a pay-as-you-go approach. You get a specific amount to pay for each step of the project, but you rarely get the full loan amount up-front. Most loans for residential construction projects last 12 months, but if your project stalls then extension fees come into play.

Extension fees are unfair in principle. You’re basically paying extra money to get access to money that is already yours in the first place. Yes, this practice may seem unjust, but these fees exist nonetheless, and it is in your best interest to learn how to avoid them.

The first way to avoid these fees is to scrutinize the terms of your loan and see if extension fees apply in your case. If they do apply, you need to plan your project carefully.

With Arizona Construction Loan, Extension Fees are a Danger you want to avoid.

Extension fees can eat away at your project’s budget.

If you can’t finish a project on time most often your lender is more than willing to extend the term of your loan. But they will likely charge you X amount of dollars each month until your project is finished. These fees are usually drawn from your remaining loan balance.

Slowly but surely these fees can eat away at your projects remaining budget. Month by month the money you have on hand to actually finish your project slowly withers away. In the worst-case scenario, you might not even have enough money to finish your project. So what are some tips to avoid this nightmare?

With an Arizona Construction Loan plan ahead to avoid the danger of extension fees.

First, you need to plan for the most common reasons any project gets delayed:

  • Permitting problems: Ponderous bureaucrats with clipboards can stall your project for several weeks. Do your best to ensure your property is up to code to avoid this situation.

  • Weather problems: Rain, mud and generally miserable weather can keep any work from getting down on your construction site. There is really no way to avoid this, except for ensuring that work is carried out during a generally favorable season.

  • Contractor issues: grumbling or lazy contractors may not finish the work you asked them to perform on time.  Only work with the most reputable contractors to ensure your project stays on schedule

  • Plan Revisions:  the other issues listed are generally beyond your control. But you can develop a clear plan and stick to it!

No doubt every project will have its delays, so you may want to have little extra money on hand to cover unforeseen costs. But above all, have a clear plan, swear by whatever you hold sacred not to divert from that plan and you can avoid extension fees.


Dennis Dahlber Broker Ri CEO Level 4 Funding LLC Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC 
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701 

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

© 2016 Level 4 Funding LLC. All Rights Reserved.
Copyright | Privacy Policy | *Terms & Conditions

Arizona Hard Money Construction Loans: Is it the Help That’s Right For You?

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page2-img2If you’re looking to finance a construction project, you may be wondering where to secure financing. If land in your area is scarce, if your planned development is something others consider a pipe dream or if your credit situation is less than ideal then you should consider the benefits of hard money Arizona construction loans.

Yes, traditional banks offer loans for construction projects. However, they avoid risk by applying a rigid bureaucratic checklist to see who qualifies. If you as a borrower don’t tick a box specific box, don’t expect your deal to close. Plus the terms of any agreement you strike with a conventional lender are likely to be as inflexible as the concrete foundations you intend to pour.

Hard money is different. This type of lender is usually an investor or group investors, who are not beholden to government regulations or typical bank bureaucracy. Hard money providers can look beyond a rigid checklist when it comes to you and your project. As investors, they are more interested in your projects potential instead of your credit score. Of course, this type of loan will cost you more than a conventional bank loan, but it offers many advantages.

Ask Yourself these Questions to determine if a Arizona Hard Money Construction Loan is the right help for your situation:

There are three basic questions to ask yourself to determine the right type of financing for your construction project:

  • When do you need the money?  Expect a traditional bank loan to close no sooner than 30 days, after, you have gone through the tedious rigmarole of completing their application process. In the case of hard money, most deals can close within days. This speed can allow you to secure the purchase of an attractive parcel of land before other developers.

  • How much flexibility do you need?  Banks have very rigid loan terms from which they will not divert. They have a one-size-fits-all approach when it comes to construction projects. If your proposed project is, say speculative, a traditional lender is not going to renegotiate the terms of your loan if you run into difficulties. Hard money offers more leeway to speculative developers who might need a bit of deference. As investors, hard money providers might be willing to tailor the terms of your loan and your repayment schedule to meet the needs of your unique project.

  • Can you qualify?  Once again banks have a one-size-fits-all approach when it comes to the type of borrower who is eligible for financing. If a particular aspect of your financial history doesn’t meet the bank’s criteria, you are out of luck. In the case of hard money, if your project has enough potential your personal financial situation is irrelevant.

Arizona Hard money construction loans benefit borrowers who need speed, flexibility or those who are in unique financial situations.

If you need to secure the purchase of a prime piece of land quickly, don’t wait around for a conventional bank, approach a hard money provider first. If your proposed construction project doesn’t exactly fit the mold, hard money providers can work out a deal which can meet your needs. If you have been turned down for conventional financing in the past, hard money can get your construction project off the drawing board and into reality.


Dennis Dahlber Broker Ri CEO Level 4 Funding LLC Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC 
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO

NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701 

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

© 2016 Level 4 Funding LLC. All Rights Reserved.
Copyright | Privacy Policy | *Terms & Conditions