4 Ways To Avoid Counterfeit In Hard Money Lending

Getting a mortgage loan is vital for your real estate investment ambitions. However, the acquisition process can be daunting as most banks have restrictive rules and regulations. In such cases, the alternative is looking for hard money lenders available in the market. Hard loans can be relevant to your needs but getting yourself into counterfeit and hard moneylender scams is also possible. So, how do you avoid counterfeit in hard money lending? You should look out for:

Full Funding Guarantee

When the hard moneylender promises you a full-funding guarantee of the property value for a higher fee, you should be concerned. This is because most lenders will fund a loan up to 70% of the property’s appraised value. So when the lender tries to convince you with the “full funding guarantee” talk, it is a red flag, and you should consider other options.

Unusually Low-Interest Rates

You should expect charge rates for the loan amount you are applying for. The rates in hard money lending can, however, be in excess of what the bank offers. This is because of the risk involved in hard loans, as they are meant to serve you quickly. But when the lender lures you in with unusually low interest rates, you should be concerned and look for alternatives in the market.

Upfront or the Collector Fee

When the lender asks for a higher upfront fee for your loan to be processed, you should question the motive. This is a sign of a scam. Most lenders have specific steps that they follow before the loan is processed, and if otherwise is done, you must walk away.

No Property Evaluation Needed

The right hard money lender will fund your loan after effective evaluation of your property and collateral. However, when the lender promises to process your loan without conducting a proper property evaluation, you might end up in a scam. Remember, the value of your property determines the amount received from the lender.

Hard moneylenders offer an alternative to mortgage loans provided by banks. The loans are serviced faster and when you need them. However, chances of counterfeit in hard money lending and scams are also higher, which is why the above tips become helpful.