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New Hard Money Lender Launches In Beverly Hills

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Almost everybody around the world would be familiar with the city in California known as Beverly Hills. It is home to Hollywood stars, and the rich and famous. Unsurprisingly, lots of interesting projects start here each year, and they require some significant financial investments in order to be completed. However, startup companies, in particular, find it difficult to get their foot in the door.

Wilshire Fund Opens in Beverly Hills

Fortunately, a new company has been launched, which provides hard money loans to those who want to finance a project in this area. Wilshire Fund, as the company is known, aims to provide an alternative way to finance real estate.

Wilshire Fund is a California-based private lender offering finance solutions for real estate borrowers seeking transaction loans and/or cash-out when traditional financing is not available. Our team of expert loan officers specializes in identifying the best rate and terms for loans tied to residential or commercial real estate assets – ranging in value from $200,000 to $15 million.

Background of Wilshire Fund

Although this particular element of the business is new, Wilshire Fund has already existed for some time. They were first established in 2005, serving all of the state of California. Their specialization has been in both commercial and residential loans. The company is also committed to excellence, hiring only those with the best experience in the field. In fact, although the team is small, they have a combined experience of over six decades in real estate consulting, loan brokerage, and commercial real estate.

What the company particularly prides itself on, is their level of service and personal attention. Compared to other financing options in the area, they offer much better rates. Because the cost of living in Beverly Hills is substantially higher than anywhere else in the state – and indeed the country – these are some very interesting proposals that could open up the market to more investors and individuals.

With the average cost of living in Beverly Hills, CA being 463, that puts it 239% higher than the average of California and 363% higher than our nation’s average. This simple outline of the cost of living index was formulated using prices of: goods and services (weighted 33%), housing prices (weighted 30%), groceries (weighted 13%), utilities (weighted 10%), transportation (weighted 9%), and health care (weighted 5%). Thus, goods/services, along with housing influences the majority of the cost of living index.

Wilshire Fund as Hard Money Lender

As a hard money lender, Wilshire Fund is committed to a personalized service and to make very quick decisions. They offer this commitment to all customers, regardless of the amount they want to borrow. That said, the average price of a home in Beverly Hills is $3,059,600, compared to the national average of $175,700, which does demonstrate that the loan amounts are likely to be substantial.

Some even believe that the prices of homes in Beverly Hills are so substantial that it has become an untouchable market. But for Wilshire Fund, it is about understanding the unique needs of every individual, and the unique offerings of each property. The company has a complex process in place to determine which loans are available, and they are happy to discuss these with anyone interested. In fact, they even offer an online loan application to further expedite the process.

The economic times continue to be incredibly stressful. In markets like Beverly Hills, it seems almost impossible for regular individuals to get so much as a foot in the door. Luckily, hard money lenders like Wilshire Fund aim to change this, thereby ensuring that the market remains not just competitive, but also fair. It is certainly a lender to watch, therefore, and one that could provide people with the opportunity to purchase a luxury property.

Real Estate Assets Are Interesting Investments For Private Hard Money Lenders

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The standards for mortgage qualifications are becoming increasingly tight. While this makes life difficult for some, it also means there are new opportunities for private hard money lenders out there. Indeed, anyone who has some money could consider becoming involved in this, particularly because they are backed by the security of always having a buffer of between 25% and 30% since that is the maximum loan to value. Naturally, it is important to exert due diligence in this.

Crowdfunding and Self-Directed Investment Opportunities

Numerous experts agree that there are more and more opportunities out there for private hard money lenders. They are there to fill the gap left by the institutional lenders stepping away from mortgages as a result of the Dodd Frank Wall Street Reform and Consumer Protection Act.

The Dodd-Frank Wall Street Reform Act is a law that regulates the financial markets and protects consumers. Its eight components help prevent a repeat of the 2008 financial crisis.

Traditionally, private investors would opt for an IRA or 401k with a focus on real estate investments. Doing this conservatively means that no more than 20% of the retirement account is invested in this, which means another 80% can be invested in a range of other assets, including crowdfunding. The added benefit is that crowdfunding investing can be done outside of the retirement accounts as well. Indeed, again and again, this has been shown to be very secure.

Over the last several years, there has been extraordinary interest in private lending, as it has proven to be both profitable and—on a risk-adjusted basis with proper underwriting and due diligence—secure.

Property Valuations Are Conservative

One of the things that set private hard money lenders apart from banks is that they use a very different underwriting process. Traditional mortgages are limited to 90% for 30-year mortgages. Hard money lenders don’t focus on an applicant’s credit history, instead of looking at the value of the property. They then provide a loan for no more than two years. Additionally, hard money lenders offer much higher interest rates than traditional lenders. Lastly, hard money focuses strongly on distressed properties, rather than traditional homes.

The security of a hard money loan lies in the property itself. This means the valuation methods used have to be more conservative. The professional appraisal is important, but other tools are used as well. This is because appraisals are geared towards traditional mortgages, are based on the opinion of just one individual, are often wholly different to the agreed purchase price, and don’t consider the potential in distressed properties.

Hard money lenders take all the information available to them and make a decision based on that. They simply want to know whether they can get their money back and whether they can make a profit, even if this means taking the property back. This is also why they will only offer a 75% loan to value as a maximum, which gives them that protection. Additionally, they look at properties as if they are the fixer and flipper themselves.

With their singular focus on turning a quick profit, real estate investors are often regarded about as warmly as used-car salesmen. But experts say they’ve played a major role in spurring the housing market’s recovery. By targeting distressed properties, they’ve reduced neighborhood blight and increased the supply of homes in a region where inventory has been very tight.

Clearly, those who have money to invest, and who have at least a baseline of understanding of the housing market, should consider becoming hard money lenders. In so doing, they not only help themselves, but they also help assure economic recovery.

California’s Barrett Financial Group Now Offers Hard Money Loans

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In California, both the commercial and residential real estate markets are booming. As a result, people are looking for new methods to finance real estate purchases. It has recently been announced that Barrett Financial Group has developed a number of hard money loans for a range of different types of properties.

Extremely trustworthy, reliable, fast and experienced hard money lenders in California. We provide local hard money for your next new construction project, commercial property acquisition, fix and flip, rehab or buy and hold. Give us a call today to submit your request for your next hard money loan.

Barrett Financial Group will be offering hard money loans for non-owner occupied and residential occupied properties, rehab loans, fix and flips, trustee sales, short sales, cash out refinances, REO finances, commercial loans, business investment properties, land loans, and construction loans. These products will also be available across the state, in all of its major markets.

Barrett Financial Group is a private funder that has many years of experience in every element of real estate lending. This ranges from fix and flip loans to refinancing to bridge loans.

Bridge loans are temporary loans that bridge the gap between the sales price of a new home and a home buyer’s new mortgage, in the event the buyer’s home has not yet sold. The bridge loan is secured to the buyer’s existing home. The funds from the bridge loan are then used as a down payment for the move-up home.

The group focuses strongly on the needs of customers, ensuring that they are efficiently and rapidly provided with the money they need for their real estate projects. Of particular importance is that Barrett Financial Group is very well-known and trusted in the industry.

Barrett Financial Group is outstanding. I have used Trevor and his team twice in the last two years. They are fast, friendly and focused on getting you a great loan/rate. Each time I have found Trevor to be very attentive, he’s always available, approachable and someone you can trust. I highly recommend Barrett Financial.

The organization has built its reputation in Phoenix, AZ, where their hard money lending programs have long been established. For a long time, the company has wanted to expand into California, particularly since they have experienced significant growth over the past three years. The goal for the organization is to assist people who have ambitious real estate projects, ensuring they can turn those into realities. The group works in partnership with a number of highly reputable partners, and they always look for other investment sources to join them.

Naturally, the organization does have acceptance criteria for those who want to apply for a hard money loan. That said, they have numerous criteria that people could fall back on, making their acceptance rate substantially higher than that of many other loans of their kind. The criteria include the ability to provide property collateral, insurability, and credit history. However, as it is a hard money loan, the latter criteria is of the least importance. Indeed, traditional lenders are failing borrowers by placing so much importance on credit score alone.

Traditional lenders provide funding for the majority of financed real estate transactions out there. They loan up to 80% of the home’s purchase price, and with certain types of loans, well over 90%. When it comes to hard money lenders, however, they follow different criteria for underwriting loans. Sure, they do take credit score into consideration, but they also look at a number of other factors.

Essentially, the Barrett Financial Group believes that if people have a poor credit score, the should not be excluded from receiving financing or loans, particularly for businesses or real estate purposes. This is a mentality that they have instilled in all specialists that work for them. Together, they ensure that clients and customers are able to build their own knowledge and find the best loan programs for their customers.

California has welcomed the news that Barrett Financial Group will be offering these loans, not in the least because there is now a flourishing fix and flip market.

California’s real estate markets have performed impressively in 2016. Home sales in most markets are robust and home selling prices continue to rise. California’s performance shows the resiliency of its huge economy, which has regained over 2.2 million jobs since 2010, which more than replaces the 1.3 million jobs lost during the Great Recession. Tight housing inventories, strong buyer demand, and appreciating home prices make California an attractive market for fix-and-flip investing. Here is a closer look at California markets that offer outstanding investment opportunities.

Fix and flip properties are notoriously difficult to receive a normal mortgage on, simply because the intention is to only own them for a short period of time. Most traditional mortgage lenders will only provide loans for at least ten years. With great difficulty, people may be able to find a five-year mortgage, but the early repayment penalties are very high on these. Hard money loans, by contrast, are designed to only be in place for a short period of time, usually for no more than two years, which makes them ideal for fix and flip properties.

Barrett Financial Group brings with it substantial years of experience. They are a trusted partner both for those looking for funding opportunities and loans for fix and flip or other real estate projects, but equally for those who have investments to make and want to ensure that this is managed the right way. It is expected, therefore, that the group will do exceptionally well in this state, particularly if their success in Arizona is anything to go by. The overall impact this will have on the real estate market in California will also be very interesting to keep track up, as it could potentially give more people the opportunity to fix and flip and, eventually, to invest in and become landlords or property managers, to name but a few.

Hard Money Lenders – Who are They and What Do They Offer?

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Housing hunting is fun, but also stressful. Many people see buying a home as a significant milestone of adulthood. But what happens if your credit isn’t right? While you can attempt to get a traditional bank loan with a co-signer, there’s also another option. Hard money lenders provide the funds for purchasing a property to people with damaged credit. A hard money loan offers similar pros and cons to a traditional loan, but it might be easier to get.

Who Are Hard Money Lenders?

No, they aren’t creepy characters in a trench coat making backdoor deals. Hard money lenders are privately funded lenders. They are not affiliated with banks, credit unions, or mortgage lenders. People with a history of poor credit, bankruptcies, or foreclosures, might consider a hard money loan. The hard money loan amount is based on the property value. If the borrower is unable to repay the loan and defaults, the hard money lender takes possession of the house and resells it.

What Terms Are Included in a Hard Money Loan?

Years ago, a hard money loan lasted typically for a short term of one to five years, but this is no longer the case. Now hard money loans come with longer terms, which makes them more attractive to home buyers. However, a lender generally wants a return on their investment. Therefore, a borrower needs to have some of the money necessary to purchase the property as a lender won’t lend out more than 70 percent of the property’s current value. This practice ensures the lender can sell the property if you default and collect their money plus extra.

The lender’s interest rates could be higher than traditional, Federal Housing Administration (FHA), or Veteran Affairs (VA) housing loans. Hard money lenders might charge 10-15 percent interest rates.  Points ranging from two to five are added to the loan amount to generate an origination fee. Two points are two percent of a loan amount of $150,000 equaling a $3,000 origination fee.

According to Forbes, 32 percent of mortgage loan applicants with a credit score of less than 700 were denied. Sure 68 percent of applicants were approved, but what about the others? “Just because you have a low credit score doesn’t mean you can’t purchase a home. There are a lot of options out there for consumers…,” says Randy Hopper, senior vice president of mortgage lending for Navy Federal Credit Union. Property buyers looking to invest in a flip or a home should consider applying for a hard money loan because it could be the answer to their dilemma.

The Benefits of Using a Hard Money Loan

The home buying process might be lengthy, depending on how long it takes to find a property. But the way you purchase the house could drag if you attempt to apply for a traditional home loan. Factors like the amount you need, credit score, and negative items on your credit history might reduce the chances of approval. Therefore considering a hard money loan might be a valuable option because of the benefits associated with them.

Faster Application Process

Since a hard money lender isn’t focusing on your credit score, the application process goes by quicker. A hard money loan is ideal for someone who doesn’t want to wait for the bank to run a credit check, look into employment history, or to review bank statements. If a borrower has cash available, approval can usually occur within a week as opposed to 30 – 45 days for a regular mortgage loan.

Flexibility

Hard money loans come with a flexibility that other investments don’t offer. Because hard money loans don’t use regular underwriting and examine the numbers for each deal, the length of the loan and the interest rates can get negotiated.

Short Term Deals

Hard money loans are best for short term borrowers. The higher interest rates don’t make them suitable for a person who wants to live in the property long term. A person who intends to buy and flip a home could make out well with a hard money loan, especially if the purchase, repairs, and selling happen fast.

If you’re looking for an easier and faster way to finance your property buying needs, then a hard money loan might be right for you. To learn more about hard money loans, please contact a hard money lender to discuss your interest.

Resources

https://www.bankrate.com/finance/credit/low-credit-score-borrowers-get-mortgage.aspx

https://www.forbes.com/sites/camilomaldonado/2018/07/27/32-percent-of-applicants-without-perfect-credit-denied-in-2017/#fc1cc264b189

https://www.law.cornell.edu/wex/mortgage

https://www.refiguide.org/hard-money-loan-for-people-with-bad-credit/

https://retipster.com/hard-money-101-everything-need-know-getting-started-hard-money-loans/

https://www.va.gov/housing-assistance/home-loans/loan-types/

 

Hard Money Vs. Bank Money In Florida

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When it comes to real estate, new investors and buyers should look at hard money vs. bank money in Florida. Many people are used to the traditional route of applying to the bank for a mortgage.

However, rather than just looking at bank money in Florida, there are options for borrowing from hard money lenders. So, what are the differences between hard money and bank money in Florida? It’s worth taking a closer look to determine which one might suit your needs best.

The Difference Between Hard Money and Bank Money in Florida

When you approach a traditional lender such as a bank, they will examine your application based on three main things:

  1. Credit: Your credit score and your history of making payments.
  2. Ability to pay off this current loan – your earnings and assets.
  3. They have stringent regulations and in order to get your hands on bank money, you need to meet those.

When you approach a hard money lender, they don’t have as much interest in your credit rating or history. They are vaguely interested in your capacity to pay off the loan. They will zero in on one main thing – an asset that will be the security. The number one difference between a hard money lender and getting bank money in Florida, is that the bank won’t let you use the property you’re buying as collateral, but the hard money lender is only interested in that.

What Else?

Length of Time to Close the Loan:

It’s no secret that banks take their time processing loans. This is due to the regulatory bodies that they have to abide by. Every box must be ticked, every document scrutinized and this takes time. This means that it usually takes a bank about 3 – 6 months to assess an application, and that can feel like a very long time, particularly in real estate. As Ray Brown said “The best time to buy a home is always five years ago,” and in a market that changes rapidly, waiting any length of time is just affecting your investment.

If you go for a hard money loan, you can get it in anywhere from just a few days to a few weeks, at most. If you’re buying to flip real estate, which happens regularly in Florida, time is of the essence. Tampa-St. Petersburg, Florida had the 4th highest flipping rate in the country in 2018 at 8.2%.

Interest Rates:

If you’re looking for low-interest rates, then bank money is the winner. One of the reasons that banks can offer lower interest rates is because their risk is much lower. The length of time of the loan will also be far longer, more like 10 – 30 years in comparison to a hard money loan. Current bank interest rates stand around 3.45% for a 15-year fixed mortgage. With a hard money loan, you will have a much shorter term, with much higher interest – probably around 30% of the value upwards.

Property Types:

Most traditional bank loans for real estate focus on single-family homes and some commercial properties. On the other hand, hard money loans can be used for bridge loans, construction loans, and mixed-use property loans. If you are investing or looking at something that isn’t conventional, then hard money wins here against bank money.

Regulations

The big difference between getting a hard money loan versus a bank money loan is down to regulations. Traditional banks and lenders are licensed, whereas not all hard money lenders are. This is because they are private individuals or companies with their own money.

Recently, Governor Rick Scott vetoed House Bill 747, which would have made it a huge challenge for hard money lenders to operate in the state and in fact would have damaged the housing market. According to Adam Millsap at the Charles Koch Institute, “Florida’s population is increasing rapidly, but the housing supply is not keeping up.”

Since the Great Recession, banks have moved towards standardized products and not thinking outside the box when it comes to lending, and this can push many people beyond the qualification levels needed for loans.

Which is Best – Hard Money or Bank Money?

If you want the safety and security of a long-term loan with low interest and can meet a bank’s requirements, then bank money is the way to go. If you need more flexibility or need money fast for a good investment, then hard money should be right up your street. Whatever is best for one person may not be for another, so it’s up to you to make the final decision.

Resources:

https://www.flgov.com/wp-content/uploads/2017/06/HB-747-Veto-Letter.pdf

https://www.attomdata.com/news/most-recent/2018-year-end-u-s-home-flipping-report/

https://www.valuepenguin.com/mortgages/florida-mortgage-rates#targetText=In%20Florida%2C%20the%20average%20rate,ARM)%20average%20is%203.63%25.&targetText=Mortgage%20rates%20can%20change%20from,should%20lock%20in%20your%20rate.

https://www.forbes.com/sites/adammillsap/2019/01/07/regulations-make-floridas-housing-more-expensive/#12fc7d643f5d

 

 

What Can a Hard Money Lender Do For You in Today’s Market?

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Do you have a small business that needs some extra funds? A hard money lender might be the answer to your financial problems. Learn more about how hard money lenders can give you the loan you need to stay in business.

How Hard Money Lending Works

Have you tried to take out a loan with traditional banking? They often deny your request if you have bad credit or don’t have proof of a steady income. It makes it nearly impossible to keep your business running without some extra financial assistance. Therefore, some small businesses or startups have to resort to hard money loans.

Quick Hard Money Lending Process

You can easily apply online for a hard money loan as soon as you find a few that you can trust with your business. The significant part about hard money loans is everything is faster, from your application acceptance to getting the money you might need right away.

This can come in handy for those trying to build businesses such as flipping properties. If you depend on traditional banking, it might take too long to buy the property you have your eye on. Or to get the materials in time to get those renovations done. Sometimes fast money can be crucial to the success of your business when you are flipping properties or other similar businesses.

Don’t Need A Good Credit Score for a Hard Money Lender

Do you have bad credit? It doesn’t mean an instant denial of getting a loan when you go through hard money lending. Instead, a hard money lender can help you where banks and credit unions will usually deny your request when your credit is too low.

According to the Senate Committee on Banking and Financial Institutions, hard money loans are for “people with tarnished credit, whose low credit scores render them ineligible for more traditional forms of credit.” You don’t have to worry about having any other alternatives to save your business from bankruptcy.

Hard Money Lender Policies

Like with any loan, it’s better if you check each hard money lender’s policies. They will all give you different estimates on how much money you can borrow. This can be good since you find out which one offers the best deal possible, meaning you get to borrow enough without having to worry about any additional fees.

These lenders will all have different rules on any fees or points that they will charge you. So, make sure you know what each lender’s policy is with their hard money loans. These fees or points can add up to a lot of money if you aren’t careful.

Downfalls of Using a Hard Money Lender

Hard money loans sound good when you have nowhere else to turn to. However, don’t be too hasty in accepting the first offer presented to you.

High-Interest Rates and Points

Since you have to repay the loan faster than traditional lenders, prepare to pay more than you borrowed. As reported by the Senate Committee on Banking and Financial Institutions, hard money lenders give you a shorter amount of time to repay the loans.

So, this means you might have higher interest rates and points than traditional loans. Those interest rates and points can be high, so always think it over before signing up with any hard money lender.

Get Legal Advice Before Signing

A hard money lender can be helpful for businesses, but you also have to be careful with the paperwork involved. If hard money loans are your last resort, then this will make you vulnerable. They might try to add clauses that you might not understand that will add stipulations even after you repay them their money.

You should have the clauses in your deal looked over by someone who can give you legal advice on it. If you don’t, you might get yourself into something you didn’t know you agreed upon.

Are you ready to get a hard money loan? If your business is in danger of shutting down before it begins, you might need to look into getting this loan. It can save you from having to pull the plug on your business before you can make your dream job a reality. So, why not look into getting help from a hard money lender? You can go over your choices with your family or business partner and see what the best option for your business should be.

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

 

 

Hard Money Loans: Cracking the Hard Situations

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When you’re dealing with hard situations and need help fast, a hard money bridge loan is the type of loan you may need. Many people are unaware of what a hard money bridge loan (1) is or how a hard money lender works. In its most basic terms, a hard money loan is a short-term loan secured by real estate. When you are racing against the clock to obtain a loan, hard money loans for your hard situations you can be approved sometimes in as little as 48 hours.

Length of Your Hard Money Loan

The length of your loan typically runs about twelve months, but lenders can extend it for two-five years in special cases. Significantly, using hard money loans for hard situations help crack difficult financial times.  The hard money loans are considered temporary and beneficial answers because you don’t have to pay the principal off throughout the life of the loan. You’re only paying the interest or the interest with limited principal through the loan’s life. When the loan term is over, you have a balloon payment due which includes whatever you have left on the hard money bridge loan to pay.

What makes hard money loans work, and be approved quickly, has everything to do with your property’s value. Hard money lenders may check your credit score, but they’re primarily concerned with the real estate property you’re putting up. Many hard money lenders use what’s called the loan-to-value ratio (LTV) to determine how much they will lend you.

How Fast are Hard Money Loan Lenders Growing?

It’s the LTV ratio that helps hard money lenders evaluate your loan risk. The more money they are going to lend you, the higher the hard lender’s risk. When you have assessed a higher risk based on your LTV ratio you will have to:

  • Pay a higher interest rate on your loan
  • You may be assessed additional costs, like fees or the lender may  need you to get mortgage insurance

But you won’t have any problem find a hard money loan lender. Hard money loan lenders are up 40% since 2016. There’s a lot of activity in the hard money loan markets. A hard money commercial loan lender knows each hard money loan will have different percentage rates based on how much the loan is and what their real estate property value is.

Crowdfunding companies are jumping on board to become hard money loan lenders too. They are loaning out millions of dollars at very high-interest rates which makes them a fortune. But that’s not the way the real hard money lenders like to do business. Most ethical, hard money lenders are in the business to help those who need quick loan approvals while making a reasonable profit for their business. Those hard money lenders approve their loans with a sense of fair play.

What are Hard Money Loans Used For?

Business is better than ever for hard loan lenders, but they try to “work with those who need them most.” This is usually in the low to middle housing and commercial markets. That’s the market where people who are hit with unexpected bills or events, don’t have the cushions of large savings accounts. Private money or hard money lending is also always good for certain populations or targeted groups like those who flip and flop houses. Hard money loans can be great for short-term or long-term investors who need their financing fast.

Many buy and hold investors will use hard money lending to buy and renovate properties before they refinance the homes through conventional loans. Another common hard money loan need is when long-term investors need to season their property. There are as many reasons as there are dollars to lend through hard money loans. But cracking the hard situations is done on a one-on-one case basis.

It’s not uncommon for your loan to be approved through a hard loan lender before you walk out the door. A prequalification can be faster than that. You can be prequalified in as little as three minutes. More importantly, you can get your funding, cash in hand in as quick as 10-15 days. It is the quick turnaround time, and the ability to take care of whatever emergency you’re dealing with that makes hard money loans so popular.

When You’re Ready

When your ready for your private money lender experience reach out to us. Find a hard money lender who has the expertise you need, with the interest rates and costs you can afford. You want your hard money lender to have the real estate knowledge needed to value your property fairly. Get a hard money loan with terms that help you deal with your hard situations. You can now take your first financial breath in a long time.

(1) https://www.fdic.gov/regulations/safety/manual/section3-2.pdf

What Do Hard Money Lenders Look For?

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For individuals seeking capital to purchase a new home, avoid foreclosure, or make renovations, a traditional bank loan doesn’t always work out. Things like a poor credit score or little equity can quickly lead to rejection. However, in recent years, hard money lenders have provided people with a way to get the money they need for real estate projects or to keep their homes.

Unlike banks who look at a borrower’s financial history when considering whether to approve a loan, a hard money lender uses the property as collateral. This means applicants have a much higher chance of getting approved for quick cash. House flippers often turn to these private lenders to secure a new investment before it’s sold. They’re great resources for real estate investors, especially when home sales are up as they are right now. According to the Department of Housing and Urban Development, sales for single-family homes saw a 2.5% increase from June to July in 2019.

However, even though hard money lenders are concerned with credit scores, borrowers should still know what they’ll be considering when evaluating their loan application. That’s why we’re going over some of the top things these lenders keep their eye on.

The Value of the Property Used as Collateral

Because the house in question will be used as collateral against the loan, one of the lender’s primary concerns is the total value of the property.  They need to know that if the loan isn’t repaid, they can recoup their losses. To do this, they’ll need to determine the loan to value ratio. This may require having an appraiser look at the property or having a real estate agent run a broker price opinion that will analyze the value.

If the borrower is seeking a loan to complete renovations on a home they own, the lender will determine how much the property will be worth after the upgrades are made. This is why house flippers often go after hard money loans. Lenders may also include land in the appraisal of the property as well.

It’s important to keep in mind that many hard money lenders won’t give loans for properties occupied by tenants. Potential legal issues could make the loan too risky.

The Borrower’s Commitment to the Property

The last thing a hard money lender wants is for the borrower to default on the loan. This is why they look at how committed the individual is to the property before approving the loan. Yes, the lender doesn’t care about a borrower’s credit score, but they still need to have confidence that the repayment terms can be met.

If a borrower needs the loan to secure the purchase of a home, the lender may want to know if they’ve put any type of down payment towards the property. If they have, the lender knows the borrower has something to lose if they don’t make their mortgage payments. This added reassurance goes a long way.

Lenders may also want to know what the borrower’s plans are for the home. If they plan on flipping it, what renovations do they intend to make? Once they sell the renovated home, what’s their plan for paying back the loan? Many house flippers have a portfolio of investments they’ve made. This is a good tool for securing hard money loans.

The Ability to Repay

The British economist John Maynard Keynes once said, “If you owe your bank a hundred pounds, you have a problem. But if you owe a million, it has.”  Hard money lenders must take this to heart. There’s certainly no surefire way to know a borrower will pay back the loan. However, lenders can look for at a few things that will help them determine whether the venture is a good idea.

Lenders often look at a borrower’s exit strategy for fulfilling the repayment terms. For example, if they’re using the loan to secure a piece of commercial property, the lender may want to know how they intend to start earning a profit. Lenders may also want to know how motivated the borrower is to pay back the loan. If a house flipper doesn’t intend to start renovations on the home anytime soon, a lender may be hesitant to approve the loan.

Hard money lenders are investors too. Because these loans have higher interest rates and shorter terms, lenders can use the repaid money for new loans. Looking at the items discussed above is the best way they can protect themselves.

Resources:

https://www.huduser.gov/portal/sites/default/files/pdf/Housing-Market-Indicators-Report-August-2019.pdf

Hard Money Brokers

Hard Money Brokers and Hard Money Lenders

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When you need money quickly, traditional loans are often not the best option because getting approval can be difficult. Many people who are looking to start investing in real estate turn to hard money lenders. Understanding hard money loans is important. This guide walks you through a few things you need to know before choosing hard money brokers.

Your Credit Score Isn’t Important

When you apply for a traditional loan, your credit score is considered to be very important. Hard money brokers aren’t as worried about it because you have to put down something as collateral before you can be approved for the loan. Traditional loans often require 7% as a down payment, whereas, you can use the property that you are buying as collateral or property you already own for hard money loans. The amount of loan you possibly qualify for will be dependent on the value of the property that you are using for collateral. The hard money lenders will typically provide you a loan that covers a portion of the overall value of the property.

Hard money loans are considered to be high risk. If you don’t pay your loan on time, the lender will have to sell the property in an effort to get their money back. If they approve a loan for the full value of the property, getting the money back if you default will be slim to none. According to Consumer Finance, for traditional loans ” Loan amount must be $484,350 or less in most counties and may be as high as $726,525 in high-cost counties. ” Hard money loans do not have such a stipulation.

Interest Rates for Hard Money Brokers are Often Hefty

Hard money lenders do not lend money to people out of the kindness of their hearts. The transaction needs to be profitable for them in order for them to make the loan. This means that they have to charge an interest rate for the loan that takes some of the risks out of it for them. Higher interest rates are attached to hard money loans than traditional loans. Since they require less stringent stipulations to be met, they can be easier to get. This often makes the higher interest rates worth paying for many borrowers.

Approval Takes Less Time

Traditional loans can take a long time for approval. Many stipulations must be met and then the lender, typically a bank, takes often more than a month to approve a loan. When you need money to buy a property that is up for auction or simply selling at a great price, you need to be able to get the money quickly. This is where a hard money loan comes into play. You can often get approved for a hard money loan within a very short period of time. This allows you to never have to miss out on great deals.

Your Loan Needs to be Repaid in a Timely Manner

Hard money loans often have the requirement to be repaired in a very timely manner. The loan agreement has stipulations for when the entire debt needs to be repaid. This is often just a few years or less. You don’t have to make a lump payment to pay it off though. Many people who use the loans do pay it off in a large payment when they sell the property. Most hard money loans are used in the house flipping business.

Choosing Hard Money Brokers Isn’t Difficult

Choosing a hard money lender to work with doesn’t have to be difficult. You simply want to work with a lender that has experience with hard money loans. An experienced lender will have the paperwork already created. They will be able to answer specific details when you ask them and get back to you quickly about whether or not you have been approved for the loan.

Before applying for a hard money loan, you need to know exactly how much money you need. Have an attorney look over the application to ensure that you understand the stipulations of the agreement. You need to be sure you know how much the loan will be for, how long you have to pay it back and what the interest rate will be. Once you are approved for the loan, you can buy your property and get started with your project right away.

Resources:

Consumer Finance – https://www.consumerfinance.gov/owning-a-home/loan-options/conventional-loans/

Down payment for traditional loans – https://www.nerdwallet.com/blog/mortgages/20-percent-mortgage-down-payment-dead/

Definition of hard money loan – https://www.investopedia.com/terms/h/hard_money_loan.asp

New Hard Money Lender In Arizona

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People in Arizona will be happy to hear that a new hard money lender is offering its services in the state. Barrett Financial is a very experienced mortgage broker, and this is the first time they have ventured into hard money lending in this state, something they have long been working towards.

We are hard money lenders in Arizona that are extremely trustworthy, efficient, and experienced. If you need hard money for your next commercial property acquisition, construction project, fix and flip, or buy and hold property in Phoenix let us work with you!

This lender is focusing specifically on those people who cannot meet the stringent application requirements of conventional financial institutions such as banks. By offering people in Arizona their new hard money programs, Barrett Financial hopes that they are able to play a role in getting more real estate projects off the grounds. They are interested in those projects that banks have said no to.

The lender is one of the best known brokers in Arizona, offering a wealth of different types of loan programs.

The right type of mortgage for you depends on many different factors. A 15-year fixed rate mortgage can save you many thousands of dollars in interest payments over the life of the loan, but your monthly payments will be higher. An adjustable rate mortgage may get you started with a lower monthly payment than a fixed rate mortgage, but your payments could get higher when the interest rate changes. The best way to find the “right” answer is to discuss your finances, your plans and financial prospects, and your preferences frankly with a mortgage professional.

Considering the company’s focus on offering such a variety of loan programs, it is perhaps unsurprising that they have now also ventured into hard money lending. The company has the necessary resources to ensure that any prospective borrowers can be matched to the best source to find the funds. They will focus in particular on people who are self-employed, as they understand that these individuals generally earn a solid income, even if their tax return shows a small net income.

At the same time, Barrett Financial wants to work with those whose income does not come from traditional employment, which makes it very difficult to qualify for any type of loan, including hard money loans. Barrett Financial understands the obstacle bank statements pose for these types of people, but also know where the solutions are.

The ability to qualify for an Arizona hard money loan depends on a range of different criteria. Some of those include the ability to provide a solid collateral, insurability, and credit history. Barrett Financial, however, believes that somebody who has a poor credit score does not have to be someone who is automatically turned down for financial products, particularly as they are related to business or real estate. This is a mentality shared across the board with all employees at Barrett Financial, and this enables them to offer all their clients the most suitable solutions.

The company’s headquarters can be found in Phoenix, AZ and they are a private, hard money funder. They have a wealth of experience in all areas of real estate, including bridge loans, fix and flip loans, refinancing, and more. They focus on ensuring that customers are efficiently and quickly provided with the financial solutions they need, working only with lenders who are trustworthy and safe. Barrett Financial is well-established in Phoenix and their venturing into hard money loans is something they have been preparing for, for some time now. The company’s goal is to make Arizona’s real estate market the strongest in the country.