Why Hard Money Lenders Are Not As Scary As They Appear

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Many people think of hard money lenders as loan sharks, which are those types of people who will break your kneecap if you don’t pay on time. In reality, however, these lenders are legitimate individuals or organizations that help people get hold of home loans as quickly as possible. Very simply put, a hard money lender is a private rather than a traditional lender, meaning that this is not a bank.

Why Opt for Hard Money Loans

Many people wonder why anyone would go to a hard money lender instead of a bank. The answer to that is “convenience”. A hard money loan may have huge interest rates and run over short periods of time only, but they can be arranged within days and they are quite easy to get. This has made them popular with specific demographics.

Who Uses Hard Money Loans?

1. Fix and flippers love these loans, because they only hold properties for short periods of time, so a lengthy mortgage is not suitable to them.

If you add up all the time it takes to complete a fix and flip, you quickly arrive to a time frame that most people do not expect or plan for. Total completion time: 20 weeks (4 to 5 months).

2. Property builders, who use these loans to purchase land, build a property, and sell it. Again, this doesn’t take a lot of time.

3. Investors, such as real estate investors who see an amazing deal that simply cannot wait. Because a hard money loan can be organized in days, due to the fact that these lenders are essentially real estate investors themselves, it is the perfect solution for urgent deals.

4. People with bad credit who have a deposit ready. They may have had a recent default, foreclosure, or bankruptcy on their file. If they have cash and have spotted a property of value, then they may be considered for a hard money loan.

Bad Credit and Hard Money Loans

Technically, hard money loans were not designed for people who want to buy a primary residence. However, with so many people having bad credit or otherwise not meeting the standards set by regular lenders, they have become a viable option to consider. Essentially, people use them as a bridge loan, meaning that they take the hard money to buy their home, which is usually a two year loan. During this time, they rebuild their credit, meaning they will be able to apply for a conventional mortgage once the time is up.

Getting a Hard Money Loan

It is important that you check directories of hard money lenders so that you find the one that is right for you. This also means being aware of how these loans work. Usually, you will only be able to receive a loan for around six months to a year, although some hard money lenders now extend this to five years. You can also expect to pay substantial interest rates, usually between 12% and 21%. Furthermore, you usually have to pay for “points” or other types of fees.

Hard money lenders charge other fees besides the interest on the loan. The fees are a source of income for investors of hard money loans and it is important you understand the sources of income to negotiate the best rate and terms for your deal.

You also have to have a substantial deposit available yourself in order to qualify for a hard money loan. It is rare for lenders to even consider you unless you have at least 25% of the value in a deposit. The loan-to-value (LTV) rate is often as low as 60%, meaning you may have to save up for a 40% deposit.

2020 Loan Originations Through Anchor Loans Now Exceed $1 Billion

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Anchor Loans is the largest hard money lender in this country for fix-and-flip investors. Once again, it has proven its worth by exceeding $1 billion in loan originations within one year, and the year is not even over yet! They have been able to do this for the second year running, allowing real estate investors to get the funds that they need. This is a new national record, as well as a new record for Anchor Loans itself.

No private money lender has been around longer, or loaned out more money to the fix and flip market than Anchor Loans. In 2016 we set the standard yet again, becoming the industry’s first to originate over $1 billion in loans in a single year.

Excellent Performance for the Past 19 Years

To date, the company has had a total volume of $5 billion. They have been in business for 19 years, surviving the Great Recession with ease. Over those 19 years, they have funded some 16,000 loans, setting themselves apart as one of the go-to companies for hard money loans. Their focus, meanwhile, is specifically on the fix and flip investment market.

It costs a lot of money to fix and flip houses. In addition to buying the home, fix and flippers need to pay for repairs, contractor fees, listing and broker fees, holding costs until you sell the home, and more. […] Hard Money Loan / Private Money Loan – Best for experienced or inexperienced flippers who need money quickly.

Anchor Loans as Industry Leader

Anchor Loans first surpassed the $5 in total volume in November 2019, which is an important record in itself. Nowhere in the industry have results like that been achieved before, which has really set Anchor Loans apart as the best in the country. Indeed, their president and CEO, Stephen Pollack, is incredibly proud of the achievements of the company. He believes it is a testament to the dedication, energy, and hard work of every staff member in the organization. Furthermore, he is proud of the fact that the company is now an industry leader.

Given the extremely fragmented nature of lenders to the fix-and-flip market, where substantial numbers of small local firms fund between $5 million and $50 million per year, our attainment of over $850 million in assets under management and $1 billion in loan origination volume in 2016 is a significant achievement for our industry.

There are numerous reasons why Anchor is such a standout company. Their proprietary Fintech platform is one of those reasons, as is their excellent relationships and their overall experience. No other lenders have been able to evaluate, underwrite, and fund their applications as quickly as what this company can. In fact, most of their clients see payments in as little as between three and 10 business days. This is why the company is so preferred across the nation, even outside of California, where they are headquartered.

Anchor Loans has positioned itself as the go-to intermediary between lenders and investors. They help them create opportunities that benefit everybody who is involved. They specialize particularly on rehab properties, as they believe these properties help to improve neighborhoods in particular and local economies as a whole. The company spends a great deal of time, effort, and money on anticipating and understanding clients’ needs, thereby ensuring that they can provide the most reliable funding in the quickest way possible. This strategy has enabled them to build long term relationships based on honesty and trust. More and more, the company is able to enter other types of markets as well, where they also quickly become the recognized expert. 2020 has been an excellent year and they expect 2021 to bring more of the same.