Hidden Costs in Loans for Real Estate Investing
You were rightfully excited to find out that you were approved for a loan for real estate investing. Before you put then pen to the paper you should make sure to review all the documents.
Some money lenders include hidden costs in a loan for real estate investing. These costs could end up costing you more than first expected. Even if you have not already applied for a loan for real estate investing, it is still necessary to be aware of these costs so that you are able to avoid them.
Before you apply for a loan for real estate investing, you should research the lender. One way you can qualify a lender is by first making sure they are a member of the Better Business Bureau. Not only should the lender be a member of the BBB, they should also be a member of good standing.
Another way you can qualify a lender is by first checking with other real estate investors that you know. You can check to see if your fellow investors have used a particular lender for a loan for real estate investing and for their experience with the lender. This feedback is perhaps the best information you can receive.
Once you receive your loan documents, you should read every word to make sure there is no tricky language or terms that you do not agree with. Ask questions about anything you don’t understand. Negotiate any terms that you are not in agreement with. If, after asking questions, you are not clear on the loan documents, have your attorney or someone you trust go over the documents with you.
Some lenders trick applicants into agreeing to a loan for real estate investing that has balloon payments. With this kind of loan, you may extremely low payments at the beginning of the loan. Then when the loan has matured, there is a lump sum payment due when the loan matures. This lump sum can be anywhere from a few thousand to hundreds of thousands depending on the amount of the original loan and the interest rate.
If you are refinancing a loan for real estate investing, watch out for hidden fees that might be associated. The lender usually does not tell you about these fees until after you have signed the documents for the loan for real estate investing finance. After you have placed your signature on the document specifying you would pay the fee, ignorance of the fee does not release you from your obligation to pay it.
Pay close attention to the infamous small print. Since lenders know that people usually gloss over this part of the document for the loan for real estate investing, this is usually where hidden cost information is listed. Regardless of the size of the print, you should not leave any word of the loan document unread. Reading and understanding the documents is the best way to ensure that you don’t incur any unexpected costs with a loan for real estate investing.
If a traditional bank loan is something that will not work for your situation, you should consider a hard money loan for real estate investing.
DFW Hard Money is a hard money lender offering real estate hard money loans in the Fort Worth, Dallas area. We strive to make the hard money loan process quick and easy for all parties to the transaction and offer competitive rates in the current hard money lending marketplace.