If you are an Alabama real estate investor, developer, rehabber or property owner, the advantages of securing a hard money loan are numerous. Hard money loans are not suitable for every property financing need. They are niche loans made by private money investors who wish to earn a good return on their capital. The risk involved is substantial for hard money lender when they make these loans. In order to mitigate the risk involved, Alabama hard money lenders like their counterparts around the country follow diligent processes and prudent underwriting standards.

Overview of Alabama hard money loans

When conventional lending sources for property financing like local or national banks and mortgage lenders turn down a loan request due to non-qualification based on their strict lending guidelines, hard money loans are a good alternative. Unlike like the prime lending universe, hard money lending is a niche business. Lenders are typically well experienced in all facets of real estate investing. They more or less specialize in a specific area of real estate sphere.

Due their specialization and experience, hard money mortgage lenders are able to lend to borrowers and investors on properties others may not even care to look at or consider for property loans. Most of them employ their own capital or raise capital from other private money investors which is pooled together in a portfolio for lending commitments.

Typical loan terms and features of AL hard money loans

Irrespective of the type of hard money financing on opts for, the following are some of the standard features of an Alabama hard money loan.

• Interest Rates: Hard money loan interest rates are usually much higher than what one many be charged if they opted for a loan from resource property financing avenues like banks and mortgage lenders. They range anywhere from Low teens to high teens
• Loan Duration: The length of the loan term can be as low as a few months on a commercial hard money bridge loan to a year for construction or rehab purpose loan. On certain types of loans extended terms can be negotiated. For genuine delays, understanding lenders will
• Loan Amount (LTV): The loan amount on most loans will be determined based on the After-Repair-Value(ARV). The LTV usually allowed is typically no more than 70% of the market value.
• Closing Costs/Points: Most of the hard money loans made by Alabama lenders will carry points anywhere from 2-10%. The closing costs can be usually rolled into the loan amount.
• Repayment Terms: Some lenders do allow payment flexibility through may ways. They may allow the investor to just roll the monthly payments into loan amount. They also allow interest-only payments in certain cases.

What is the criteria to secure a loan from a Alabama hard money lender?

A hard money lender considers a variety of factors in evaluating a loan prospect. This criteria is more or less same for hard money lenders nationwide.

• Investor Profile: The experience of the property investor seeking the loan is a prime qualifying factor. This factor gains more significance when the loan amount involved is large. The complexity of the project execution also plays an important role. Experienced developers with diverse experience are usually preferred by mortgage lenders providing hard money in Alabama.
• Credit History: Any person or company lending money prefers a borrower with a good credit history. Having a good FICO doesn’t necessarily mean a borrower is credit worthy. For hard money loans, goof credit certainly helps, but it is not always necessary. Property investors have successfully secured bad credit hard money loans by presenting their case or explaining the context of their irregular repayments or defaults in the past.
• Property Types: All types of Alabama residential and commercial properties can be used as collateral when seeking a loan. Even businesses can be used for collateralization purposes. Multi-family apartment buildings, single-family homes, hotels, hospitals, retail buildings and offices can be financed through hard money in Alabama.
• Equity & Collateral: The equity in a property plays the most determining role for  a loan. The greater the built-in equity, the greater the cushion for the lender to absorb losses arising out of default or unforeseen circumstances. Properties that offer this cushion based on them being turned around, especially in case of rehab projects can be considered to be good candidates for loans.

Checklist for investors to evaluate Alabama hard money lenders

The circumstances that call for hardmoney loan  financing are varied. Usually time is of essence when looking for hard money. Investors should look for lenders that have a good reputation for being fair and reasonable. It is advisable to seek out lenders making hard money loans from referrals of other property developers in your area.

It is better to seek someone really local to your area as they can quickly assess your loan profile and convey a response faster. This become invaluable when one wants to make a new acquisition through foreclosure auctions, bank owned reo sales or short sales. Don’t waste time with hard money lenders that require documentation or collateral one cannot provide.

Commercial hard money lenders in Alabama can be more demanding. As private money lenders are hesitant to deal with novices, it is better to be prepared with all documentation and loan requirements when approaching them.

How to find a hard money mortgage loan lender in Alabama?

As mentioned earlier, it is better to inquire locally through your contacts in real estate field when looking to find a hard money lender in Alabama. If your search fails to lead you to a reputable lenders, then browse through our comprehensive Alabama hard money lenders list which contains profiles and links of all online lenders in your state.

Wealthy individuals can also be a good source for hard money. These investors might be discrete and unprofessional, so working with them can be difficult. So assess such private investors using your judgment.

To succeed as a creative real estate investor in Alabama (AL), the need for hard money is paramount. This is a critical source of financing especially when the project being undertaken doesn’t meet the stringent guidelines of most conventional lenders. So establishing good relationships with your hard money sources is important and vital.

If you can’t find the financing you need, it may be worthwhile to look for hard money from lenders in neighboring states. Since Georgia and Florida are border states, lenders there might be inclined to consider financing. If you want to try them out, check our Georgia hard money lenders list and Florida hard money lenders list.

What cities do hard money lenders in Alabama service?

Our Alabama hard money directory has lender profiles who service all the major cities. You can find lenders that service the major population centers like:

• Birmingham
• Mobile
• Montgomery
• Huntsville
• Tuscaloosa
• Dothan
• Decatur
• Oxford
• Homewood
• Opelika