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The Role of Hard Money Mortgage Lenders in the Real Estate Industry

A hard money mortgage lender is an individual or group of people who are ready to provide money both on the short-term and long-term basis to an individual to help them purchase or refinance a property. When you need financing on a short-term basis without much paperwork, hard money mortgage lenders are the best sources. The lenders are famous for the unmatched convenience they avail to people who need funding but won’t meet the threshold of traditional banks. Since this type of lending only requires minimal formalities, the industry has many scams which might lure you to take their services. Therefore, there are some factors that you must consider when looking for a hard money mortgage loan.

Here are the qualities of a good lender.

A good hard money lender must be trustworthy and experienced

Credibility and experience of the hard money lender is a vital factor one must consider when looking for the best service provider. You need to choose a lender who is credible and will not deceive and fraud you in the whole process. For this reason, you must conduct a background check so that you can establish that the lender is trustworthy. Talk to the previous clients who have used your potential lender to find out their experience. Additionally, you need to make sure you work with a lender who has the required expertise in this field. Knowing the duration in which the service provider has been providing the loans will help you know their experience status. You also need to look at the reputation they have a period in the sector within that period. Make sure you work with a hard money mortgage lender who has been in business for a long time.

Must have an easy application process

Another quality you need to look at before choosing your lender the application process and how fast they approve your loan request. As a real investor who needs a hard money mortgage, you want to get involved in a lending procedure that entails minimal documentation at the application process. Additionally, you don’t want to work with a lender who has a long application process, and the approval rate must be fast. For this reason, you need to get a hard money lender who ensures prompt and fast application procedure and approval.

Rate of interest

As an investor seeking a hard money mortgage loan, you need to get a lender who will fund your project at a favorable interest rate. The last thing you want is to pay for a mortgage that envisages high-interest rates as compared to what the mortgage paid for. Therefore, you must compare and contrast the interest rates offered by various lenders before choosing the one to approach.

Must have flexible payment terms

When choosing your hard money lender, make sure you consider the flexibility of the payment terms. Work with a lender who is ready to offer appropriate payment terms, because the majority of hard money lending is primarily on a short-term basis. However, this will be determined by the payment plan that you believe will fit your needs.


This refers to the terms as to when the lender will avail the hard money mortgage loan to you. The service response must be taken into consideration since it lets you know when you will get the funds and hence being the purchasing process or start the renovation process. Make sure you work with a lender who as minimal delays or none as this will allow getting the financing at the right time.

Must have Proper paperwork process

Even though you don’t require much paperwork when approaching a hard money mortgage lender, they still ask for some documentation that proves the funding has been availed, together with its terms and condition. For this reason, it is the mandate of your potential lender to check the paperwork is accurate to circumvent the cases of fraudulent lenders.

Strength of the lender

Make sure the hard money mortgage lender you want to approach has a strong financial backup to support your financial needs. Your potential lender must be ready to fund all your projects without struggling financially. This can be established by checking their financial strength in the market and how the service provider trades regarding their assets about their liabilities.

How the Hard Money Mortgage Lenders in Today’s Real Estate Marketplace?

The hard money lenders are taking over the real estate industry since these lending institutions linger to be the only recognized source of investment finance in the frugal lending sector. As many traditional banks continue to nurse their wound from the upshot of the first real estate effervesce, hard money mortgage lenders have taken advantage of the opportunity by reducing the application time, as they give real estate investors the capability to purchase properties and fund renovation projects.

By relying exclusively on secured loans and the modern technology like online application and mobile utilities, the hard money lenders are shaping the real estate industry.

Embracing the modern technology

It is evident that long waiting periods lined with standard and large lender mortgages have crippled the real estate entrepreneur for many years. In most cases, a slight hiccup in the procedure leads the investor to lose a chance for purchase since the other more eligible developer has provided a competitive offer. However, you will never come across these problems when approaching a hard money lender for any financial help. This is because things like prompt valuation, secured proposal and a clear understanding of the real estate industry are combined to create a perfect borrowing environment for the investor.

Additionally, the majority of hard money mortgage lenders tend to use the mobile application to expedite the process. The use of modern technology, together with the willingness of lenders have transformed the way many real estate investors and developers view capita acquisition. Gone are the days when the investors had to wait for weeks or even months to get approved.

Property appraisal and disbursement

The moment an investor identifies a property as a potential investment, they can talk to their preferred hard money lender to send an appraiser to the property within one day. The moment the property is appraised; the lender will provide the required funds to purchase the property.

Role of hard money mortgage lenders

Understanding the role of hard money mortgage lenders in the real estate industry will help you make your loan application easy and increases the chances of getting quick approval on the hard money mortgages. Additionally, you need to know all the key players in the hard money lenders and the role they play to help you get the right funding and getting financed fast. Once you decide that you want a hard money mortgage, you need to make sure that you are working with a loan specialist who specializes in this area.

In the traditional mortgage lenders, the primary role of the loan office is on the front-end of the transaction. The responsibilities of these loan officers include taking the application, they discuss the loan programs and their qualifying criteria, and they collect income and asset documents from the borrower. The application form is then handed on to processing, underwriting, and the closing officer that process the loan.

However, for hard money mortgage lenders, it is different since these experienced entrepreneurs are skilled to stage-manage the whole transaction process right from the start to the end. In most cases, the lenders will fund the hard money mortgage loans with their own money. Even though they might resell your loan to a private investor to get back their funds, they have the required expertise and relationship with various funding sources that is crucial in giving you the hard money mortgage loan that suits your needs.

The role hard money mortgage lenders play is to manage and perform the following process that will help you get your deal closed.

  •        Processing your mortgage package which includes the income, credit and asset information as provided by you.
  •        Ordering and coordinating of the title
  •        They verify and reinstate loans as required
  •        Getting you the best hard money mortgage and advising you on the best program
  •        Offering federal and state disclosures
  •        Ordering the appraisal of real estate
  •        They underwrite the application for developers looking for hard money loans
  •        They determine the mortgage servicer for your loan
  •        They create loan documents as they help in closing the deal

Any investor who is interested in buying property or renovating their houses to rent out, talking to a good hard money mortgage lender is the best option. This is because the private lending organizations have played a vital role in bridging the gap left by the economic crisis in the financial sector, giving the real estate investors the capability to be successful in a competitive sector. Since the traditional banks have opted to remain cautious and parsimonious when it comes to funding real estate projects, hard money lenders are striving to assist investors with an eye for opportunity to get the financing required to purchase the properties.

Posted On: 16th January 2018