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How To Get The Hard Money Construction Loans Seattle Investors Have To Offer

By Henry Turner


Developers and home builders sometimes have trouble finding financing for their speculative real estate ventures. Traditional financial institutions don't always feel comfortable lending funds for empty retail spaces or spec houses. Tying up cash by making a personal investment may not be feasible. Another possibility for Washingtonians, are the hard money construction loans Seattle lenders will make, if you qualify for them.

Those who have been in the construction business are familiar with these lenders. They already know this is private lending, on a short term basis, not regulated by the Federal Reserve. In order to get the capital you want from a trustworthy source, you need to do your homework. You'll be looking for a lender with a good reputation and a legitimate website.

There are advantages and disadvantages to getting cash this way. These lenders don't have the same information and underwriting requirements that can slow down the approval process from a bank. You can complete the entire process within a couple of weeks with private lenders. These are short term loans however, and the interest rates are high. Closing costs and fees will be your responsibility.

These loans are good options for developers who have some credit issues. The investor is more concerned with the worth of your collateral than how high your personal credit scores are. You will need to present architectural plans, contractor bid sheets, and detailed construction budgets. The lender will be interested in the stability of the area in which you propose to build, the market history, and any comparable sales.

Your credit history may not be the primary concern, but you will probably have to provide copies of tax forms, bank statements, and pay stubs. If you can give evidence of past development and building successes, that will help. Even when you are approved, you won't get one hundred percent of the cash you need.

Hopefully, you will have contacted a lawyer to look over your agreement with the lender before you signed it. Since these types of loan don't come under the guidelines of the Federal Reserve, you need to make sure you are protected. You should understand how much interest will accrue and what your personal liability will be if you default.

Since the lender can okay a project within a matter of weeks, you need to have everything in place to start immediately. You have to be prepared to have cash on hand to pay for underwriting fees and closing costs. Contractors, architects, and suppliers need to know what the turnaround time is. If the loan is for twelve months, the project has to be completed and sold by then.

Hard money loans can be good for developers who need fast cash for a short period of time. If you have had financial problems in the past, private lenders are more apt to approve your application than traditional lenders. Being smart about who you are dealing with and what terms you are expected to abide by is the key.




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