Uncategorized

The easy answer to this question is generally going to be no! Most hard money loans will not require a deposit.  However, there are some situations where a deposit may be inevitable. Much like a traditional mortgage or even a personal loan, you don’t want to work with a company that charges fees or money upfront. Yes, we know this is a different situation then when a company makes you pay a deposit. However it’s still going to fall into the same framework of the question and comes up quite often when consumers ask us what they need to submit an application and ultimately qualify.

When an applicant asks us this question we first tell them to elaborate on the situation. Is the online company looking for money to submit an application? Are they asking for cash up front and guaranteeing a future approval or hand off to another hard money lender in Texas? In this case you don’t want to move forward in a situation like that. In most states including Texas it’s against the law to ask for upfront fees for personal loans. Even with that, why would you want to work with a company that makes you give them cash just to process your paperwork?  It’s always best to work with a private money lender that doesn’t charge any upfront fees. Settle on a company you feel comfortable with and one that has a decent reputation not only in Texas, but on a national level. There are other ways you can be comfortable with your lender. Do they have good reviews online with current and updated licensing information? You can research Dallas lenders by doing a simple search online for the top private money lenders in Dallas. Same goes for TX cities big in small like Fort Worth and Plano.

Now, there are legitimate situations where a hard money lender may require a deposit or money down to ensure final approval. Consider a situation where a bank requires 10% down on a 500k conventional loan. That bank is going to require far more documents and verification information but they’re still going to ask for a certain percentage down. The same is true with applicants who apply for fix and flip and stated income loans. On that note you can apply with a San Antonio based hard money lender with an LTV of around 70%. While many mortgage lenders are rolling out program for consumers will little to no credit history, there’s still going to be a need to put down a certain amount as down payment. You many not be able to get a same day underwriting or 24 hour document approval. But you can ensure a fair and safe process by following all Texas lending regulations. These are mostly in place for mortgage lenders and personal loan companies but the rules also apply to hard money lenders.

We’ve all been in a situation where we need cash fast. It could be for a large amount, in this case let’s say a hard money loan. But it can also be for emergency expenses where you need a short term installment or personal loan. When it comes to real estate, not every situation is going to require the service of a hard money lender.  In this blog post we’ll learn about the different scenarios that may require this type of financing.

Most people turn to a private money lender when they are facing a unique situation. That doesn’t mean they can’t get financing from a bank or traditional home lender. Did you know that many people who use this service can often get qualified for a mortgage loan. However, there are scenarios when they can’t go down that road. For example, some applicants turn to hard money companies in Texas when they need cash fast. Most online bank lenders are going to stick with an processing time of weeks or even months.  Even if you work with a local lender in city say Dallas or Austin, they’re still going to stick with the national lending criteria. These requirements make it very difficult to fund projects or access much needed cash. In these situations it only makes sense to turn to a local Texas hard money lender. Yes the rates will be higher than what you normally see. But you’re going to have a much quicker qualifying process. Some borrowers prefer this setup because they don’t need to wait as long as they would normally. They can pay the extra finance charges and get a cash refinance or fix and flip loan approved much quicker. We see this with commercial refinance loans all the time. When you talk about commercial financing, you’re looking at lengthy amounts of time to process paperwork and qualification requirements. Expensive projects can have deadlines and cost delay triggers that pale in comparison to the finance charges that you see from a few weeks of a hard money loan.

Another aspect of why it may be best to work with a private lender is the fact that most of these companies aren’t going to require an in depth review of your credit history or borrowing transactions. Bad credit is typically not going to be an issue and you may even get though with a bankruptcy as long as it’s not current and you can explain the situation. Many borrowers apply for state income loans and fall into this situation. A normal Texas bank or mortgage company won’t approve them for home financing or stated income lending because they can’t verify their income or employment.

Ultimately, it’s going to coming down to each unique situation when determining if a hard money loan is the best choice. Most people who apply for hard money loans in Texas are going to have a specific reason why they want to move forward. In some cases it’s up to the lender to recommend a conventional mortgage company if they feel they are better suited for that service. We know of hundreds of lenders throughout Texas. The bulk of these companies are in the greater Dallas area but you can also find them in Houston, Plano and Forth Worth. You can expect to see more firms come into service in other TX communities like El Paso and Arlington as the economy improves and more people apply for online funding.

You’d think more nationwide companies would provide this type of financing but that’s not the case.  As we see with other types of loans, most companies specialize in specific areas. Many applicants find themselves in a situation where they need a hard money loan. Unfortunately, the available options aren’t much to speak of at this time. Texas generally has less regulations versus other states. But most banks are going to be risk averse when it comes to working with someone who doesn’t qualify for traditional financing.

We all know that big banks and Texas credit unions are out to make a profit. A handful of the largest banks in the country account for the vast majority of traditional mortgage loans.  In Dallas and Houston alone there’s a huge concentration of mortgage lenders that process thousands of online loans a month. Many of these TX companies can provide you with a refinance or cash out, but it’s going to be the same qualification standards as a normal mortgage.  So you may wonder why these firms don’t create a lending option for consumers in need of private lending options. The reasons for this are obvious. Most banks have a streamlined process in place that requires applicants who can check off all the requirements. They’re going to check your credit history and employment information. They will check references and past lending data to ensure you are a top candidate. It’s a stark contrast when compared to someone who’s looking for a hard money loan. Applicants who need a private lender find themselves in a unique situation. Many can’t verify their lending history and have past credit issues. Others are self employed or have a strange employment situation where their income can not be verified. For this reason borrowers turn to online companies that provide hard money loans in Texas.

Another reason why it’s difficult to find private money financing is the fact that most banks and mortgage lenders have a lengthy qualification process. This has become more of a problem over the past few years as increased regulations have been put into pace.  Factor in new rules like the Dodd-Frank Act and you’re easily looking at more paperwork and info that will be required.  While their applications are streamlined it doesn’t mean they can push funding through in a matter of days or weeks. One of the biggest reasons in why people apply for hard money loans is because they can be processed much quicker. It’s not uncommon to see a private money loan finalized in Texas in a few days or weeks. Compare that to most large lenders that will need to check employment, banking and other verification information.  Besides the common factors, they will also need to ensure you can make future payments and have enough money set aside in case of a financial emergency.  While each company is different it can be weeks or months to see an approval with a typical company.