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While hard money lenders in Connecticut do not have to abide by the same laws that apply to traditional lenders there are some laws that individual states enforce no matter what type of lender is involved in the transaction. There are some laws of which all lenders must be aware and are required to follow.

Become Educated in the Laws that Affect Lending Practices

One of the easiest ways to make sure you are operating in a legal manner is to become educated in the laws that affect hard money lenders in Connecticut. There are several laws that may have effects on the way hard money lenders operate including the following;

Interest rate ceiling

Pre-payment penalties

Allowable fees

Foreclosure processing

While there may be individual laws that the state of Connecticut applies to hard money loans, the above are the most common ones and those that are usually uniform throughout the states. This doesn’t mean every state has the same laws but rather that there are some laws that are present in every state.

Being Competitive within the Scope of the Laws Ensures a Nice Return on your Investment

Investors have one goal in mind: to make money. For hard money lenders in Connecticut this means they must maintain a database of borrowers or have the ability to locate new borrowers. When you remain competitive with other hard money lenders, it is easier to ensure a decent return on your investment. Being a hard money lender is an efficient way to earn a living, but you cannot do unless your fees and interest rates are similar to those of other hard money lenders. The key is to offer just a little bit more rather to charge a whole lot more.

Avoid Trying to Use the Laws to Your Advantage

You want to remain within the scope of the law but at the same time you want to avoid using it to your advantage in order to generate more profits. For instance, just because the usury rate in Connecticut is twelve percent doesn’t mean a hard money lender should charge up to the maximum, especially if other lenders in the same area charge a lower rate. The best way to ensure return and new business is to remain competitive but work within the scope of the law.

Being familiar with the laws affecting hard money lenders in Connecticut is an important part of setting up your hard money business. In addition, success means learning the needs of potential borrowers in order to assess how you can help them while still following both the state laws and remaining competitive with other hard money lenders in Connecticut. Education is the key to success—not finding out the easiest and quickest ways to undercut your competition. You not only want to acquire new borrowers but generate repeat business as well. In short follow the law, remain competitive but do not attempt to undercut the competition in order to generate more business for yourself (this method is not the best way to define your target audience).