About Hard Money Lenders
America is going through tough financial times; it is no secret that many Americans have fallen victim to unscrupulous lending practices and that the most important terms and conditions were not disclosed during the negotiation of a home loan. We are going through a financial bubble and because of reforms to lending practices home owners are desperate because they no longer qualify for readjustments with their current lender.
As the saying goes, desperate times call for desperate measures but, that measures that most people are taking are definitely not the best ones. A few years ago property owners counted with their home equity to bail them out of any financial problem but because of the current situation properties have partially lost value and there might not be enough equity to refinance a loan; unfortunately for home and property owners, credit card companies know that the average American no longer counts with equity in their properties so they are constantly bombarding people with ephemeral offers which later on turn into enormous headaches.
But the solution to a tight financial situation is not to turn to credit cards because their interest rate can go as high as 30% (compounded daily) and they will just add to the problem. Hard money loans on the other hand, are better financial instruments which provide affordable interest rates and terms that will help any property owner sail through this economic recession.
Hard money loans can go as high as 70% LTV (loan-to-value) but, the best case scenario would be to keep the LTV below 65% in non-owner occupied homes, hard money loans can also be issued on an owner occupied property to relieve financial stress. These types of loans can be amortized over a period of 30 years according to the borrower needs
Stopping Foreclosures with Hard Money Loans
Because of the banking crisis more and more home owners are losing their properties to foreclosure, the sad part is that many of those foreclosures can be stopped or avoided only if the note holder deals with a knowledgeable hard money lender. In California alone foreclosures have been up 260%, this figure is based on market analysis performed on July, 2008 by housing authorities.
Hard money loans can be used in order to salvage a property and avoid foreclosure. However, a property owner needs to act as fast as possible in order to avoid interest and penalties from accruing and worsening the situation.
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Showing posts with label hard money lenders. Show all posts
Showing posts with label hard money lenders. Show all posts
Friday, October 3, 2008
How to Get Private Money Lenders and How to Keep Them Long-term
How to Get Private Money Lenders and How to Keep Them Long-term
Finding a private money lender is an essential part of any real estate investor’s business. In the old days (pre 2006) you could easily get a mortgage or even hard money loan simply by showing up in the lenders office and filling out an application. If you could walk and talk you qualified for a loan.
But today in the post credit-bubble market those days are over. Getting money for your real estate investing business is much more difficult and likely to get even more difficult as the credit markets sort things out. So how do you get money for your real estate investment business?
The answer is a private money lender.
One of the keys to finding a good private money lender is determining if they have similar goals and objectives as yours. You need to understand what they are trying to achieve and if your private lending program fits their needs. For example, if the private money lender wants an investment for a 10 year period, but you plan on doing quick flips every 6 months, it will not be a good long-term relationship. You and your private money lender need to have similar goals for a good long-term relationship that will result in repeat business.
So how do you determine if you and the potential private money lender have similar goals. You need to discuss your plan and ask questions similar to a job interview. We would recommend a series of questions similar to those listed below. Obviously, you can modified these questions to fit your personality, but the information you get will go a long way in determining if this is a person you want to do business with.
Important Questions to Ask
- How much do you have in liquid funds?
- Do you have other monies you might want to consider for an investment program that pays 9% to 15% and secured by local real estate?
- What type of investments are you in right now?
- How much are they making on your current investments?
- How long do you want your money invested for and do you have plans coming up that will require your principal back?
- How available is your money or is it tied up in investments that are not readily accessible?
- Are you a “Qualified Investor” (person must either have a net worth of about a million dollars or have an annual income in excess of $200,000)
- Do you know anything about real estate investing?
- When would like to start investing?
Asking these questions will flush out how close your goals are and will foster a good long-term relationship.
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Private Hard Money Lenders and Working With a Commercial Mortgage Broker
Private Hard Money Lenders and Working With a Commercial Mortgage Broker
Private hard money lenders are in the business of providing loans and loan services to people who require hard money loans (loans collateralized by real estate.) Private hard money lenders may be direct hard money lenders or brokers of hard money loans. Most private hard money lenders are, in actuality, brokers. Some private hard money lenders are both brokers and direct lenders. In these cases, the private hard money lender generally funds one or up to a few small loans per year and serves in the broker capacity to clients for the loans they help to originate.
Deciding on whether to work with a hard money broker or a private hard money lender is similar to deciding on whether to purchase real estate with the assistance of a broker/agent or whether to make an offer direct to the seller on your own.
The advantages of working directly with a true private hard money lender are immediately evident: You may sometimes save money by going direct. Brokers are paid for their services via a percentage of the points you pay on a hard money loan. Therefore, the more brokers involved in a deal, the more you are likely to pay in both points and percentage to accommodate that cost.
If you have selected a direct hard money lender who is a good match for your project, you will be able to speak directly with the decision makers, avoiding the 'run around' that so many hard money borrowers fall prey to. You are told that your loan is going through, only to hear the next day that the lender has elected not to take on your hard money loan and now your loan is on another desk in yet another direct lender's office - or worse, on the desk of another broker who may know a broker who knows a lender who may want to fund your loan. Sometimes, the choice of direct lender is based more on the commission the broker will get than on your best interests.
By working with a direct hard money lender, you can avoid the 'run-around' and may be able to close more rapidly. After all, no one knows your situation like you do, no one can explain any extenuating circumstances better than you can, and no one is as committed to your business and your hard money loan as you are.
The advantage of working with a commercial mortgage broker is also clear: a seasoned, well-informed, honest commercial mortgage broker will have the knowledge of and access to the direct hard money lenders in Ontario, Canada, and the United States. A commercial mortgage broker will know where your loan has the best fit. A good commercial mortgage broker will help you 'package' your loan to your best advantage, helping you determine how much to expect based on the equity in your property, type of property you are collateralizing, how soon you need to close the deal, and more. A good commercial mortgage broker will be able to assist you through the lengthy application process and submit your loan request to the best direct lenders for your situation. More often than not, working with a commercial mortgage broker will save time. By representing you and presenting your loan request to the best direct lenders, it often makes the transaction run more smoothly and take less time than if you were to take on this task yourself. This often saves you time and trouble in the long run and be well worth the cost of using a mortgage broker.
articlesbase.com
Private hard money lenders are in the business of providing loans and loan services to people who require hard money loans (loans collateralized by real estate.) Private hard money lenders may be direct hard money lenders or brokers of hard money loans. Most private hard money lenders are, in actuality, brokers. Some private hard money lenders are both brokers and direct lenders. In these cases, the private hard money lender generally funds one or up to a few small loans per year and serves in the broker capacity to clients for the loans they help to originate.
Deciding on whether to work with a hard money broker or a private hard money lender is similar to deciding on whether to purchase real estate with the assistance of a broker/agent or whether to make an offer direct to the seller on your own.
The advantages of working directly with a true private hard money lender are immediately evident: You may sometimes save money by going direct. Brokers are paid for their services via a percentage of the points you pay on a hard money loan. Therefore, the more brokers involved in a deal, the more you are likely to pay in both points and percentage to accommodate that cost.
If you have selected a direct hard money lender who is a good match for your project, you will be able to speak directly with the decision makers, avoiding the 'run around' that so many hard money borrowers fall prey to. You are told that your loan is going through, only to hear the next day that the lender has elected not to take on your hard money loan and now your loan is on another desk in yet another direct lender's office - or worse, on the desk of another broker who may know a broker who knows a lender who may want to fund your loan. Sometimes, the choice of direct lender is based more on the commission the broker will get than on your best interests.
By working with a direct hard money lender, you can avoid the 'run-around' and may be able to close more rapidly. After all, no one knows your situation like you do, no one can explain any extenuating circumstances better than you can, and no one is as committed to your business and your hard money loan as you are.
The advantage of working with a commercial mortgage broker is also clear: a seasoned, well-informed, honest commercial mortgage broker will have the knowledge of and access to the direct hard money lenders in Ontario, Canada, and the United States. A commercial mortgage broker will know where your loan has the best fit. A good commercial mortgage broker will help you 'package' your loan to your best advantage, helping you determine how much to expect based on the equity in your property, type of property you are collateralizing, how soon you need to close the deal, and more. A good commercial mortgage broker will be able to assist you through the lengthy application process and submit your loan request to the best direct lenders for your situation. More often than not, working with a commercial mortgage broker will save time. By representing you and presenting your loan request to the best direct lenders, it often makes the transaction run more smoothly and take less time than if you were to take on this task yourself. This often saves you time and trouble in the long run and be well worth the cost of using a mortgage broker.
articlesbase.com
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