Getting a traditional loan for a construction project has become increasingly difficult over the last decade so more and more contractors are turning to hard money Arizona Construction Loans. Read on to see a comparison of the two and decide if they’re a good fit for your project.
First, let’s look at conventional loans from banks and big financial institutions. There are a number of pros. Banks are established entities backed by the FDIC (the Federal Deposit Insurance Corp.), so they’re typically reliable and uniform in their services. You could compare them to a nationwide chain restaurant — you know exactly what you’re getting, and you’ll see the same menu and level of service almost anywhere you go. Because of their size and standing, banks also typically offer relatively low interest rates.
However, while the sheer size of banks lets them offer some pros, it’s also what leads to their cons. Banks aren’t very flexible; if you or your project don’t fit into their box, there’s often little hope of getting approved or tweaking the terms. The same goes for a financial hiccup or a credit score that doesn’t match their predetermined threshold. Even if you’re approved, getting a bank loan can take at least a month because of all the complicated underwriting and federal regulations.
Comparing Hard Money Arizona Construction Loans
Conversely, hard money comes from private investors; they sometimes come with higher interest rates but they also offer a range of advantages:
● It’s Quite a Bit Faster. Hard money Arizona Construction Loans can be approved in a day or two and funded within a week. Banks might take a month or more to get your money.
● It’s Way More Flexible. Rather than fit into the bank’s box, you and the lender can fit the loan to work for your unique situation.
● Qualification is Much Easier. Since these are asset-based loans, lenders don’t need to know every detail of your financial history or dive into every aspect of your income. They may look at these things, but you, your project and your collateral are the biggest deciding factors.
Which Loan Fits Your Needs?
Not sure which of these Arizona Construction Loans is right for you? We can help because we’ve funded a wealth of different projects over the course of decades of experience. Come to us with your construction project and we can sit down, talk about your needs and help you decide how to get it funded.
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.