Five Common Mistakes to Avoid with Private Money Loans
Private money loans are becoming more popular as people move away from time consuming and frustrating conventional loans. Like conventional loans, there are some things you should do to make the most of a private money loan. Here are five things to consider:
- Get pre-approved before signing anything — You should never make a commitment to assume a large debt without first getting pre-approved for a loan. Discuss your loan needs with AHL Hard Money Network and let our investors pre-approve the loan you need. You will save time in the long run and avoid the heartache of having a deal fall through because you can’t obtain the financing.
- Know exactly how much money you need — Most private loans are interest-only payments with a balloon payment at the end. If you borrow too much you will have higher interest payments for money you didn’t need. You are also using property as your collateral, so failure to pay a private money loan can result in the loss of your home or commercial property. Borrowing too little could leave you short on cash for renovations or other needs while still having to make monthly payments. Do the math very carefully and only borrow what you need without guessing too much or too little.
- Be prepared for higher interest rates — Private money investors assume higher risk than a conventional lender, because they are using their own money and accepting only interest payments during the loan term. But don’t let higher rates turn you off to the use of private money. You can obtain your money much faster than a conventional loan, and the monthly interest payment will be much lower as well. Private money offers you a fast but shorter term solution to getting the money you need.
- Use a reputable lender with the experience you need — There are a lot of private investors out there looking to make a buck from lending money, but you need to work with aa established company like AHL Hard Money Network who have years of experience connecting customers with reputable private investors.
- Understand all costs and fees for your loan — You need to ask questions and understand any fees, costs, or potential penalties associated with your loan. AHL Hard Money Network will be happy to answer any questions you have; call us at 813-368-9919.
You should look at private money for your loan needs if you have less than perfect credit, are self-employed, or don’t have a regular income history. Contact AHL Hard Money Network today for a consultation!