The “3 C’s of real estate lending” will ultimately determine the interest rate you pay and the amount of money your lender is willing to loan:
1) Credit. Your credit history is the best indicator of timely payments. Do you generally pay your bills on time or has everybody in your path had to chase you for money? A lenders expectation of how hard they have to work to collect payments will affect your loan pricing. If you have excellent credit history your lender will be open minded to a lower rate. Poor credit will likely result in higher pricing for your hard money Arizona loan or a loan declination altogether.
2) Capacity. Can you afford your Arizona hard money loan? Your loan has to make sense and any professional hard money lender wants to make sure you truly benefit from the loan. Your ability to afford the monthly payments and eventually retire the obligation will be given heavy consideration.
3) Collateral. The condition and marketability of the property is the most important factor your Arizona hard money lender will consider. Your hard money lender wants to understand the true value of the real estate before they can establish a final loan amount. Also known as the “LTV” or loan-to-value ratio. Is your property in great condition and easily marketable in its current state? Does it need work, is it in a major metropolitan region of Arizona or is it rural. And of course, the most important question to answer is “what price can the borrower command for the property if they needed to sell it in the current market?”
Once the “3 C’s” are properly addressed your hard money lender can properly price the loan and arrive at a loan amount they are comfortable with.