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Before you make a decision about a hard money lender in New Jersey, you want to think about a few things first. You would never enter into a transaction with a traditional lender without knowing something about the bank or financial institution, and you should take the same precautions when choosing a hard money lender. There are 5 primary factors you should look for while you are researching hard money lenders.

Location of the property

Since hard money lenders prefer to loan money on properties that are close to their offices, you need to be mindful of this when you are seeking a hard money loan. While traditional lenders will cross state or county lines, this is not always the case when you are seeking hard money. These individual investors and companies like to put their funding back into the local community, so you increase your chances of finding an interested investor to fund your project if you seek out a lender that is close to the property.

Purpose of the loan

Keep the purpose of the loan in mind when you are seeking a hard money lender in New Jersey. Remember, you will need to sell the investor or group of investors on your project, so the more information you are able to provide, the better your chances are of obtaining the funds you need for the project.

Loan to value ratio

Since hard money lenders will typically only loan from sixty to sixty-five (sometimes seventy) percent of the property’s value, you want to think about how much money you actually need to borrow compared to the value of the property. If you already own the property and want to expand, you need to assess what the value might be after the project is complete since you may interest a lender in loaning you the funds based on the value after expansion.

Existing liens on the property

Since hard money lenders require a first lien on any property they finance, you need to assess whether you have the ability to provide clear title to the property. If not you will need to add the existing lien to the new loan in order to make the hard money lender in New Jersey the first lienholder.

Choose a lender with whom you can build a relationship

Even if you have good credit and an established business it is highly likely you will frequently have the need for the services of a hard money lender in New Jersey. These short-term loans are great for those times when you need funds in a hurry or just don’t want to go through the red tape involved with traditional lenders. You may also choose hard money loans as temporary measures during the completion of a project and then convert to traditional funding at a later date. When you have a lender you use on a regular basis it will make the process smoother and allow you to complete everything in a timely fashion.