Hard Money Lenders Online

Hard Money Funding Is It Right for You

Hard Money Funding? You have searched long and hard for the perfect property but now you need to find funding. The conventional methods of finding the money you need won’t work because the property needs some heavy repairs. Someone mentions that you should try hard money funding. You are willing to look into any options available but what is hard money funding exactly?

Hard money financing may work for you but this type of loan is expensive. Hard money lenders usually expect the down payment or loan to value to be fifty percent and as many as eight points as well. The hard money type of loan is primarily from private investors or groups of investors. Other more traditional sources for loans like bank funding unusually try to avoid this type of loan. To define hard money in terms of dollars it means that a loan for $100,000 would be about $1500 per month plus $8,000 in points right up front. The hard money loans are handled on a loan by loan individual basis. These can be loans that go on for years but most likely the lender will expect a balloon payment between one and three years.

Investors in real estate like the hard money funding opportunities because they want to fix up properties that they buy and quickly do a turn over so in these cases the loan to value is actually based on the resale value the property is expected to have. This means that the investor is able to get a full one-hundred percent loan for the purchase and the repair of the property. The owner of property that is about to fall into the state of foreclosure can take advantage of this type of funding. This will give them the time to fix their credit rating in order to get conventional refinancing or it can give them a longer period of time to sell the property.

Just like any money lender the hard money lender expects to make a profit on the money that they lend whether the borrower makes a payment or not. If you decide that this is the right loan for your needs be sure that you will be able to meet the obligations set by the loan. Also, before you accept a contract for hard money funding you should thoroughly check the references of the lender and be sure that all of your questions and concerns have been completely addressed. Be sure that everything discussed is clearly stated in writing.

Hard Money Commercial Loan Overview

What is a hard money commercial loan? This is probably a question that has been asked so many times when one hears about it and yet has no idea what it really is. Well, this type of loan is one of the riskier commercial loans available to those who have a commercial property or are planning to acquire one. At the same time, this type of loan is offered by a commercial hard money lender and not the typical bank or financing institution you have in mind. A hard money commercial loan is provided by a private group or company or an individual investor.

Hard money commercial lenders get themselves in a riskier position than banks. Instead of approving loans by checking the borrower’s credit, they assess approval through the property. Whether you are planning to purchase a commercial property or you’re in need of funds to help your current or existing commercial property get back to its knees, a hard money commercial loan may be the answer for you. Lenders of this type of loan are beneficial to those who have poor credit history or in general, a low credit score. At the same time, this type of loan is great for those who are looking at receiving the funds quickly. Banks usually take at least 30 days to be able to process the loan and release the funds. That’s why hard money commercial loans are usually called fast money, because you can get the funds as fast as possible.

You’ll never know when you’ll need financial aid for your commercial property. It may be that your business is losing money because of various reasons and perhaps a loan is what you need to pay off the bills or renovate that property to make it more appealing. On the other hand, when you are just about to purchase a commercial property that has a high demand, there may be other investors who are likely to snatch the deal from your hands if it takes you forever to get the funds. With this kind of loan, your hard money will allow you to purchase the property faster than any traditional loan from your bank.

You’re probably wondering what the drawback is. If this kind of loan is all that good, then how come people still avail of loans from financial institutions? If lenders can accept loan applications from borrowers with poor credit and release the funds in as little time as possible, why wouldn’t all borrowers get a hard money commercial loan? Because the lenders take more risks from the bank, they do charge higher rates than the banks. For example if a bank offers you 7% interest rate, the lender may charge you 10%. Of course it all depends on the lender you choose. It’s always best to do your homework and research on the many possible lenders in your area. Make sure to know them and know about them as you check out the various rates that they offer. Don’t decide too quickly. Make sure you know everything about the loan you’re about to make.

Why Use Hard Money Private Lenders?

If you are looking into a loan and you are looking into using hard money private lenders, then you have pretty much figured out that the real hard money loans are not made by lending institutions, financial companies, or banks. At the point that you are looking into hard money lending, you know that your options at this time, are very limited. Hard money private lenders can come in very handy if you have exhausted all your resources and are on the verge of foreclosure or having to give up your home to a short sale.

When you are working with hard money lenders, they are usually private parties that want to invest their money in real estate for a good return on their investment capitol. The lending terms can be quite creative as the private lender wants to make the loan work so he can make a high rate of interest on the money that he Is putting up for the loan. Don’t be fooled by the creativity and the personal attention you get in the loan process, the lender is going to do everything he can to insure that his money is safe.

You will notice that you will only be able to borrow up to 70% of your home’s value at the most when you work with hard money private lenders. This percentage could go down, depending on the lender’s perspective on the risk he is taking with this particular loan. The lender will want to protect himself and his money because there is obviously a risk in lending to you at this particular point in time. You may have some serious negotiating to do if you have a loan on your property and the private lender cannot get first lien position. He may ask for cross collateral, that is to say he may want to use another of your properties for the collateral so he can have first position. If the first position lender’s amount is low enough and the total of loans do not exceed 60%or 65% you may be alright.

Due to the perceived risk factor, you should also expect to pay a higher than usual interest rate on this loan. The average interest on hard money loans is somewhere from 11% to 19%. Hard money private lenders can help you from losing your home to the bank; they are taking a risk the banks will not. The higher fees and interest will be well worth it for saving your home and credit from foreclosure.

Hard Money Mortgage?

The term “hard money” in a hard money mortgage refers to the type of loan this is. This is usually a loan that is funded by a private investor in the local area that the loan is being made. The person who is taking out a hard money loan is usually in some kind of financial distress. Do not confuse this type of loan with a bad credit type loan, as the bad credit loan is often funded by a lending institution of some sort. Often times, the hard money mortgage is funded as a result of the borrower being in arrears on his house payment or is pending foreclosure.

When we are talking hard money lending, we are talking about a loan that has a LTV, or loan to value of about 65 to 70% of the property’s value. This low LTV rate will assure the lender, in the event of default,the property will sell for at least the amount of money owed against the property. Vary rarely will you find a private lender who will lend more than 70% on a hard money mortgage.

If the property does not have the value to support the paying off of an existing mortgage, and is made because the borrower is facing some form of financial disaster like a foreclosure. Many times, the hard money lender will not be able to get a first lien position on the property because of the existing lien from the original lender. When this is the case, the private lender may ask for “cross collateral” for the loan. This is just using another piece of property for collateral where the lender can have a first lien position. By all means, the hard money lender wants to have that first lien position to assure his investment.

The cost of a hard money mortgage is also higher than a traditional mortgage loan. The points (a form of upfront fees) on a hard money loan are about twice that of a traditional mortgage. It is not uncommon to see a hard money loan with 5 points on the front. The interest rates are also traditionally much higher than on a bank or financial company’s mortgage loan. These high fees are justified because of the additional risk factor that the private lender is taking on this type of loan. In all fairness, these fees are much less than the loss of the property by the borrower on a foreclosure or short sale.

Define Hard Money Easily

Looking to define hard money the easy way? This article will help you understand what hard money is really all about, understand who it’s for and when it is usually used. You can find all sorts of hard money definition online but below is a more comprehensive explanation for those who are confused. Read along to be able to define hard money yourself.

Hard money is the term used for the finances you receive from a hard money loan. On the other hand, a hard money financing is a loan based on the borrowers assets. Investors are usually the ones who avail of this type of loan. It is usually used to invest on a real estate property. Take for example if you are looking into a business venture such as buying and selling a house or buying a commercial property and having it leased by retailers, then getting a hard money type of loan is right for you.

Now that you are able to define hard money, you are probably wondering where to receive those funds? Who lends hard money and how easy or difficult can one avail of it? There are a lot of hard money lenders out there. You just have to get in the know. These lenders are usually discreet because of the amount of cash they handle and manage. Imagine these people have extra and readily available cash to invest on various business ventures. Just imagine how much money is involved. Thus, they usually work from the comforts of their homes. This is why you have to ask around and see if anyone knows one. Ask your neighbors or those in the real estate business to find out if there is one in your area. This is also why they are referred to as the private lenders. They are not like your conventional bank that everyone knows.

So why do you think is hard money preferred by those who avail it over getting a loan from a bank? Like what we are discussing above when we define hard money, it is perfect for those who are acquiring a real estate property because the primary collateral will be the real estate property. And since properties move quickly in the real estate business, specifically the ones for investment purposes, it’s best to get hard money because of the faster processing times. Lenders of this type of loan aren’t like banks that processes loans for at least 30 days. When you get an investor for let’s say a fixer upper home, you simply need to convince that lender and show the property. Once he or she agrees, you’ll easily receive the funds.

Hard Money Profits

Make hard money loans and you get a high rate of return on your cash. You have to do it properly to be safe, of course. You also need a lot of money to invest to do this.

What are “hard money” loans? They are short-term loans (usually 24 months or less) made to real estate investors, usually so they can purchase and rehab a property. There is often a loan fee of as much as five percent or more of the loan amount, and up to fifteen percent or more annual interest. Why do they want these loans?

Hard money means speed and simplicity. When using hard money lenders, an investor can tell a seller “I can close for cash in a week.” That gets the seller’s attention, especially if he has had offers that have fallen through due to financing contingencies.

Hard Money – How It Works

An investor can usually borrow 65% to 70% of the property value, but not just the current value. As a hard money lender, you’ll loan money based on the ARV, or “after repair value” (as determined by your appraiser). You’ll look at the property, more than credit scores, another reason investors will come to you. Let’s look at an example.

An investor finds a beat-up house that he can buy for $105,000. He has a plan that when complete will bring it up to a market value of $182,000. He figures it will take a month to complete, and two months more to sell it. He comes to you, and you agree that his projections seem reasonable. Your appraiser estimates a $186,000 market value when the project is done.

You agree to loan him 65% of the ARV, which amounts to $120,250. The excess beyond the $105,000 purchase price (about $15,000) goes into an escrow account, to be doled out as the repairs begin. Notice that if this investor keeps his costs down, he might do this whole project without any of his own cash invested.

The 4% loan fee you charge is $4,810, and is added to the loan balance, so the investor owes you a total of $125,060. You are charging him 15% interest, and he can pay just the interest due each month, but the whole balance is due within one year. If it takes longer than that and you have confidence in his plan, you might do another loan after that.

For the sake of our example, we’ll suppose that it takes Two months to finish the house, and two months to sell it. The investor gets $181,000 for it. He paid $105,000, and he made a profit of $31,000 after a total of $45,000 for all of his expenses. he is happy. Now let’s look at what part of those “expenses” went to you.

You had the buyer pay for the appraisal and any other costs of closing the loan, so your total investment was $120,250. This was repaid when the house sold, along with the loan fee of $4,810. You also collected four months of interest on the whole balance of $125,060 (the loan and the fee that was also financed), which totals $6253. Your total profit then was $11,063 on an four-month investment of $120,250. That’s an annual rate of return of 27.6%. How many banks make that on their loans?

Does that seem like a lot for the investor to pay? Well it is, but the interest rate and other fees are irrelevant if they allow you to make a good profit. Remember that he made $31,000 after paying those expenses. In any case it makes sense that hard money lenders get paid well to take risks that banks won’t take. If he screwed up the project, stopped paying, and you had to foreclose, you might be selling a half-finished house for just enough to get your money back.

Suppose you keep most of your money out there in these kinds of loans. Since it isn’t all invested all the time, and is making only 5% in the bank, you average just an 18% return. What does that do to a $200,000 investment portfolio in 12 years? It makes it into 1.6 million dollars. You can see why investors with cash make hard money loans.

Steve Gillman
http://www.articlesbase.com/real-estate-articles/hard-money-profits-140225.html

Hard Money Brokers and Hard Money Lenders

Hard Money Broker

Hard money loans are made by private lenders and are very different than traditional loans. Hard money lenders can work directly with borrowers or hard money brokers can facilitate loans between borrowers and lenders. Some hard money brokers work in both capacities funding small hard money loans themselves and brokering larger ones. Many people require a hard money loan when buying or investing in real estate, and fortunately California hard money loans are pretty easy to find. There are many California mortgage brokers that can help you find any type of loan you need.

Choosing whether or not to use a hard money broker is the same as deciding to use a regular mortgage broker or approaching individual lenders yourself. There are advantages as well as disadvantages to using a hard money broker and deciding which avenue to take is a decision that you should make carefully.

There is no shortage of California mortgage brokers, and contacting them all directly to find your best deal is a time consuming task. Even finding the best deal on a California hard money loan can take a lot of searching. This is one of the main advantages to using a broker, they do all the leg work for you. A hard money broker may also know of lenders that you may not have considered and may be able to get you financed even if you could not find a lender wiling to take on your loan. A good hard money broker will also be able to assist you in the application process and make sure you have everything you need and that everything in your loan is working to your advantage.

Working directly with a lender has its advantages as well. Not using a broker means that you will probably save money and will not have to worry about paying for a commission for the broker or paying other fees or points. The more people you have involved in the lending process the more you end up paying so dealing directly with a hard money lender will usually allow you to save. The terms of most hard money loans are steep, with high interest rates and other costs so it is important to save where you can. If you want to make sure that you are getting your best deal and do not pay any more that you have to, working directly with a lender is in your best interest. If you need help with the process or cannot find a lender to finance you, a broker may be able to assist you and find you the financing you need.

yanni raz
http://www.articlesbase.com/mortgage-articles/hard-money-brokers-and-hard-money-lenders-710109.html