Hard Money Mortgage Loans – Check Them Out

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Do you need financial help to pay off your mortgage? Most people aren’t able to get a loan through traditional lenders like banks and credit unions. Read on to learn more about how hard money mortgage loans can be the answer to your recent financial troubles.

Why You Need Hard Money Mortgage Loans

Did you lose a good job or get a reduced income? When your financial situation changes, you can have a difficult time paying off bills that used to be easy. After so long, this could lead you to become at risk of getting a foreclosure on the house you love.

So, what are your options? Traditional lenders usually won’t let you borrow money from them when you are close to foreclosure. They also take too long to approve the loan you might need right away. This is where hard money loans can help you when you have gone over all other options. It might be your only hope if you want to keep the house and prevent foreclosure from being on your credit history.

Who Are Hard Money Lenders

Hard money mortgage lenders are individuals or a group of investors who allow you to borrow money from them when you need it most. It’s usually for those who have already tried and failed to get a loan through banks, credit unions, and other avenues.

It can also be beneficial for those who just got a new job that pays a lot more than your current one. The increase in your income can help pay off the hard money loan and allow you to keep the house.

Why Hard Money Lenders Risk It

You need to put some property up as collateral for them to approve you. Whatever property you put up as collateral is the one the hard money lenders use to value how much you get for your loan. They can’t risk lending money to you without having something on the line for you to lose. If you can’t repay the loan, they can take that property and sell it. Therefore, they will take the risk with you since they can still profit from you even if you don’t repay them as planned.

If you can’t repay the loan, they can take that property and sell it for their profit. An excellent way to get them to approve you is to show them how you will repay the loan you borrow from them, especially if you give them a thoroughly written plan.

Hard Money Loan Terms

You can apply for a hard money loan online, which is a fast and easy process. People don’t even need to have a good credit history to qualify for this loan like traditional ones. As reported by the Financing Strategies For Real Estate Investments, “they will lend based on the strength of deal and not so much on the ability of the borrower to pay it back.” So, you can have a bad credit history and still be eligible to get a hard money loan.

The downside is that borrowers have to repay a lot more with hard money lenders than traditional ones. According to the Financing Strategies For Real Estate Investments, these lenders usually charge from anywhere between 8 to 18% interest rate. They might even charge you points, which means each point they charge will amount to one percent of the amount you borrow. This implies the total amount you owe could be more significant than you initially thought.

Getting the Best Deal

You should always try to find reputable online hard money lenders. Ask for referrals or search reviews to see which ones are legit and have a good reputation. There are plenty of scams out there to be wary.

There are a lot of great lenders out there. Don’t settle for the first one who approves you for a loan. You need to wait and see which one offers you the best deal possible. Hard money lenders will have different rules regarding interest rates, points, and any other fees that you might not have thought of before.

Therefore, you need to read the fine print before signing the deal. Another smart alternative is hiring a professional who is experienced with hard money mortgage loans. They can help prevent any misunderstandings that will have you regretting getting a hard money mortgage loan.

Are Hard Money Mortgage Loans Worth It?

Do you want to save your house from foreclosure? It’s really up to you and your family if you think hard money mortgage loans are worth all the negative aspects that come with it. However, if you don’t want to lose your home, it might be your only option. So, research today and find out if this loan is for you and your family. It could be the best decision you’ve made in a long time!

Sources: https://sbnk.senate.ca.gov/sites/sbnk.senate.ca.gov/files/final%20backgrounder.pdf

 

 

The Inner Workings of Hardmoney Loans

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Starting off in the real estate market can be difficult when you are a new investor. Getting the money necessary to buy properties isn’t always easy to do. FreeandClear states that  “Although all the mortgage documents are intended to serve a specific purpose, usually legal or regulatory, the sheer amount of paperwork creates significant difficulties”. Many new investors turn to hard money loans to finance their projects because they are quick and often easier to get than traditional loans. Before applying for a hard money loan, use the following tips to ensure you can make an informed decision.

Find a Reputable Hard Money Lender

The first thing you need to do is find a reputable hard money lender. You need to ask for references from others who have been in the real estate business for a while. Hard money lenders are often individual investors who must be licensed in order to provide loans. You can check the licensing of any lender with the local real estate bureau. You want to be sure you work with reputable lenders to ensure you get the best loan possible.

Ensure You Are a Good Candidate for a Hard Money Loan

The great thing about hard money loans is that you don’t need a stellar credit score to be approved for one. Many people with subpar credit scores are able to get loans based off of the value of the property they are purchasing. The property serves as collateral for the loan. You don’t have to put down a large down payment, but you do have to repay the loan quickly. Many people pay off the loans when they sell the property for a profit. Hard money loans aren’t ideal for people looking to finance their personal home. Because the loans require such a quick repayment time and have high-interest rates, it wouldn’t be financially beneficial to use hard money lenders for the financing of your personal home.

Interest Rates for Hard Money Loans are High

The interest rates that hard money lenders charge for their loans are often higher than the rates of traditional loans of 3.99%. The lenders don’t take a down payment when they get the loan and thus need to make a profit from the loan in some way. The interest payments are high, but they are worth it for many investors. The hard money loans allow them to get the money they need quickly with little hassle.

Fees Are Often Associated with Hard Money Loans

Hard money lenders often charge an origination fee for the loans they offer. The origination fee is a fee that covers the processing of the loan. The fee will be pretty high when you apply for your first few loans. Once you have established a relationship with a lender, this fee often drops over time.

Hard Money Loans Aren’t Long Term Loans

It’s important to determine how long you want to take to pay back the loan before you apply for one. If you are looking to pay back a loan over the course of a few decades, a hard money loan isn’t right for you. Most hard money loans have a strict deadline by which the loan must be repaid. The exact date the loan must be repaid is included in the contract that you sign. Some lenders are negotiable when it comes to the payback date. If you are going to sell the property quickly for a profit, repayment of the loan in a short period of time should be easy.

Failure to Pay the Loan Isn’t an Option

Hard money lenders ensure their investment. They make sure that they will get repaid for the loan that they give you no matter what. When you agree to a hard money loan, you use the property you are buying or another property as collateral. If you fail to pay the loan, the lender can legally take the property from you. This doesn’t happen often because the people who invest in real estate through hard money loans already know that they are going to sell it for profit and repay the loan quickly.

Hard money lenders are often very easy to work with when it comes to real estate investing. They know that buyers need to get money quickly in order to get the jump on other buyers in the market. They work quickly and are able to provide you with large amounts of money in a short period of time. They are a great option for newbie investors who want to get their feet wet in the real estate market.

References:

https://www.washingtonpost.com/realestate/many-borrowers-say-the-mortgage-process-is-a-major-pain/2017/02/28/c215d3ba-fdc2-11e6-8f41-ea6ed597e4ca_story.html?utm_term=.a92d16a37517

https://www.fhfa.gov/DataTools/Downloads/Pages/Monthly-Interest-Rate-Data.aspx

Finding Hard Money Lendors

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Buying and flipping houses has become increasingly popular in recent years due to the numerous shows on television showing that it can be a lucrative investment to make. Unfortunately, the shows neglect to tell you how the flippers fund their projects. Many turn to hard money lenders to get the money they need quickly and easily. Unlike traditional loans from banks, you often don’t need to wait weeks for approval for the loan or have a great credit score. The loan is often based off of some sort of collateral, which can be the property you are buying. Finding hard money lenders doesn’t have to be hard to do though. The following guide walks you through a few things to look for when you start your search for a hard money lender.

Search for Local Lenders

It’s important to look locally for a lender. There are many times when lenders want to look at a property before they invest in it. It allows them to make sure that there is a potential for a flip to be a lucrative investment and that you aren’t asking for money than is really needed.

Search for Lenders with a Proven Track Record

Many people are trying to get into hard money lending because it is proving to be very lucrative. It’s a good idea to find lenders who have been in the business for an extended period of time so that you can talk to others who have worked with them before or at least read reviews about the lenders. You need to be sure that they don’t change the interest rates over time or overcharge the clients.

Search for Lenders that Allow Access to Loan Information

A professional hard money lender will be completely transparent. They will allow you to see all of the information on your account at all times. This allows you to track when payments are due, how much you have paid toward the loan and when payments need to be made. This allows you to be sure that every payment is tracked properly.

Search for Lenders with Reasonable Interest Rates

It’s important to know that hard money loans often have higher interest rates than traditional loans. You still need to make sure that the interest rate is reasonable for your loan. The average interest rate for a hard money loan should be between 10% -15%. The reason the interest rates are so high is because the loan is designed to be quickly repaid and is a huge risk for the lenders. The lenders are using the property as collateral for the loan, if you default, they will have to put in a lot of effort to get their money back, thus the need for the high-interest rates.

Search for Licensed Lenders

There are scams in the real estate investing market, so you need to take the time to look for lenders who are licensed. These lenders will have taken the time and put in the effort to prove that they are a reliable lending source. You can contact your local attorney general’s office to find out if a lender is licensed and registered in your state before doing business with them. Doing your due diligence could save you a lot of money in the long run.

Search for Lenders Who Meet in Person

Some lenders claim that you can get approved over the phone in just minutes. According to the Federal Trade Commission, “It is illegal for companies doing business by phone in the U.S. to promise you a loan or credit card and ask you to pay for it before they deliver.” It may be tempting to work with a lender that allows you to apply and get approval for a loan without having to go through the hassle of meeting people, but it’s an illegal practice that you need to avoid at all costs.

Take the time to do thorough research about any lender before applying for a loan. You want to be sure that you have read reviews from other borrowers, determined if they are licensed and registered and have the contract looked over by a lawyer before agreeing to any terms within it. This protects you from having to pay more than you should for the loan or getting taken advantage of all together.

References:

Federal Trade Commission (August 2012). Advance Fee Loans. Retrieved from:  https://www.consumer.ftc.gov/articles/0078-advance-fee-loans

Hensel, Don. Hard Money 101: Everything You Need to Know About Getting Started with Hard Money Loans. Retrieved from: https://retipster.com/hard-money-101-everything-need-know-getting-started-hard-money-loans/

 

Working With Hardmoney Lenders

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If you want to be a real estate investor today there is an advantage to having a good relationship with hardmoney lenders. Especially in today’s market great deals come up quickly and to be able to take advantage of a good deal when it becomes available you will need a good source for available funds. Bank loans are very strict today and it may not be possible to get quick financing from conventional financing. Hardmoney lenders are available to provide financing to the real estate investor when they need financial assistance to take advantage of opportunities that come up quickly.

Private money lenders offer loans that are considered non-traditional and are called hard money personal loans. For the real estate investor, working with hardmoney lenders who offer a hard money rehab loan means that both parties will make money from the properties that they find. The lender will base the loan application on the potential of the property after it is repaired. Their criteria is asset based and when the real estate investor finds a property that they can rehab and turn a quick profit the hard money mortgage loans will give them the opportunity to take advantage of the property to make a quick profit.

Another advantage that the hard money mortgage loan holds for the real estate investor is that credit checks are not required being that the criteria for the loan in based on the rehab value of the property. If the investor has less than perfect credit it is still possible to get a loan from the lender. It is also not necessary for the borrower to fill out piles of paperwork, produce endless credentials or any other types of financial proof of stability. The property speaks for itself.

Hardmoney lenders are much easier to deal with than conventional lenders or bank officers. After flipping a couple properties it is possible to build a good working relationship with the lenders making the funding even easier. The private lender is just that and there is no necessity to deal with a panel of loan processors or a loan team just to obtain a simple mortgage. The loan offer comes quickly and makes all the difference when the real estate investor is trying to take advantage of a great deal that comes along. Instead of waiting weeks for an application approval it will only take days. If you are looking for a private lender your fellow investors will probably know a couple good private lenders who will be willing to work with you.

Hard Money Mortgage Lender

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Are you having trouble paying your mortgage bills? Losing a job or a new change in salary can affect a family’s ability to pay their mortgage payments on time. However, this doesn’t have to be the end for you and your family. Read on to learn more about how a hard money mortgage lender can help you through your financial struggles.

How Hard Money Mortgage Loans Work

Have you tried getting a traditional loan from a bank or credit union? You might not have much luck if your credit score is too low or you need money right away. Several factors can stand in your way of getting a loan from traditional lenders.

However, all is not lost if you are desperate for financial assistance. When you have no other alternative to help pay your mortgage bills, then a mortgage lender might be your only hope.

Hard money mortgage lenders can come from private individuals or a group of lenders willing to invest in real estate. You can find some good ones online or in your local area. Then you can fill out an easy application to see how much you can borrow from the investor.

Fast Money and Having a Proposal

If you need money right away to pay your mortgage bills, then mortgage lenders are the way to go. They usually approve you a lot faster than traditional loans. So, even if you can get a traditional loan, it might be too late by the time you get the money you need.

According to Financing Strategies For Real Estate Investments, a hard money mortgage lender “will lend based on the strength of deal and not so much on the ability of the borrower to pay it back.” This means that the borrower need not have a history of good credit or proof of income.

As long as the investor will make money off the deal, they will more than likely help you keep your home. Therefore, you need to have an excellent proposal that portrays how you will pay them back the money you borrowed. If it’s organized and thorough enough, then your chances of them approving you for a loan are much higher.

How Much Can You Borrow from a Mortgage Lender

However, they won’t trust you to repay such a hefty loan. You need to put your property up as collateral to get them to agree to the deal. As reported by the Financing Strategies For Real Estate Investments, a mortgage lender will usually lend out 60 to 70% of what your property is worth. This is how they earn a profit from the deal since they can sell the property if the borrower isn’t able to repay. They won’t if they gave you 100% of the property’s worth.

Pitfalls of Hard Money Mortgage Loans

Getting a hard money mortgage loan can save you from foreclosure and losing your home for good. However, these loans have a lot of negative aspects to it than from traditional ones. As stated by the Financing Strategies For Real Estate Investments, these mortgage lenders can charge you an 8 to 18% interest rate on your loan. This is because hard money loans give you a shorter amount of time to repay them back.

They can also charge you points and other fees that will increase the total amount you borrow. Loan points are a percentage of your loan. You might think one or two points is nothing, but if you borrow $200,000, one point would be $2,000 each. That can be more than you bargained for, so make sure you can repay them, and the deal is worth it.

You should shop around to see which lender will give you the best deal possible. It’s important to ask what their interest rates and other stipulations they have before accepting or signing any papers. Each lender will have different rules, so don’t settle for the first one that sounds good.

Research online today to find the best hard money mortgage lender to see if it’s an option for you and your family. There’s always an investor out there willing to give you a shot even when you have negative circumstances preventing you from getting a loan from banks or credit unions. It might help you keep the house you love and avoid a foreclosure going on your credit history.

Source:  http://ideaexchange.uakron.edu/cgi/viewcontent.cgi?article=1445&context=honors_research_projects

 

 

Hard Money Personal Loans Defined?

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Not to stereotype or anything like that but when I think of hard money personal loans, I think of the old fashioned loan shark that we all got to know in those movies made in the 50’s. As far as these types of loans go, in their true sense, they are very hard to come by. There are not any financial institutions or banks that will make a personal loan to anyone with bad credit or is in a financial crisis. That is going on my definition of a personal loan, which would be a loan on your signature and promise to pay only. These signature and promise to pay loans are available on a business level, and they are called bridge loans, mostly to fund a project and the lender is betting that the project pays off. For a hard money personal loan, be prepared to put up some type of collateral.

The hard money lenders are usually private parties and they want as much assurance that the loan will be paid as they can get. It is very common to fund a hard money loan with real estate for the collateral. Although, there are certain instances when you could put anything you own that is of value up for collateral on hard money loan. This will all be up to the lender and just how creative he feels like being on this particular situation.

When you are looking for hard money personal loans, you should be aware that whatever you’re collateral is, you will only be able to borrow about 50% to 60% of its current value. This is because the lender wants to be sure if you default on the loan, he will be able to get his money back out of his investment. The tougher your situation is, the less the loan to value ratio is likely to be.

Just as your particular situation will play a large part in what your loan to value ratio is, the interest rate will also reflect the amount of risk that the lender feels he is taking on with your loan. The interest rates will usually fall in the higher than normal range. This will be somewhere from 11% to 18% depending on the risk and other factors of your loan. There is a place for hard money personal loans and at times they can be of great help.

Define Hard Money Easily

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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.