Archive for February, 2010:
Hard Money Private Lenders Are Here To Help
If you are looking for a loan and you are considering 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.
Finding Hard Money Lendors
Finding hard money lendors can be a relatively simple task. Some experts do say that it is very difficult to find hard money lendors or even downright impossible but this is just not so. A hard money rehab loan is not an impossible loan to find. Actually, in today’s economy it is even easier to find these types of loans and there are numerous sources as well. All it really takes is the know-how in finding the right loan for your needs. The following is an effective way to do just this.
Times are different but the most effective method for finding hard money residential lenders is by calling ads from your local newspaper. Most newspapers are now available online which makes searching the ads even easier than ever before. Online you will now find the best private lenders and some of the best firms and they all have websites. Comparing fees and loan terms is so much easier now that they are all online. Usually you can also find the process for the loan application and the requirements that you will need to fulfill in order to obtain a loan. The loan to value ratios, repayment schedules and the collateral that will be required is usually all listed.
Most hard money lendors will often require that you own a piece of vacant land to use as collateral. If they should need to foreclose, vacant land is much easier than any other types of collateral. Taking possession of a house is a time consuming and costly proposition because there are laws for squatter’s rights, renter protection laws, and a host of other regulations involved. The investor who wants to buy a residential house and rehab it is still able to find a hard money mortgage loan but there is just a lot more paperwork involved. To find good hard money financing for rehabbing a residential property it will be necessary to prove you have the income that will be sufficient for repayment of the loan. No lender is interested in taking a chance on a loan that will end in foreclosure. Private lenders will openly consider rehab properties while conventional lending intuitions will seldom take a chance on these kinds of properties.
Finding good hard money lendors is an important thing for real estate investors in particular. There will most likely be less upfront expenses which afford them more control of their positive cash flow making it possible to come up with better deals. Private lenders will also consider one-hundred percent financing which is a huge advantage to the real estate investor who needs to rehab the property to flip it.
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