Is A Hard Money Loan With Bad Credit Hard To Get Or Are There Private Lenders Who Will Work With Me? - 0 views
started by Lucio Cross on 14 Apr 12
started by Lucio Cross on 14 Apr 12
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The maximum loan to value for some private loans range from 50% to 75%. No deals are done at the higher loan to value for just two reasons. First the hard money lender requires lots of equity with default they can list and sell the home quickly because they will theoretically be below market cost. The reason I say in theory is because there are so many REO's, Short Sales and foreclosure properties available that what was normally considered an excellent deal is common position. Therefore, private lenders are more particular about the attributes, borrowers and loans they are going to fund.
Next, any real estate investment that's less than 30% equity may not be good investments for the investors unless they can be purchasing the property for any cash flow. In that case they can be long term investments and not suitable for the short term nature of these expensive bridge loans.
High Interest rates.
Whether as n the property market investor buying and or rehabbing commercial or residential investment real-estate the interest rates are much higher than conventional commercial and also residential investment lending. The rates are higher much because the risks are much higher and there method to obtain these funds are limited. Risk and Reward. Supply and Demand. The risks are higher because these loans are not underwritten based on the standard conventional guidelines and you will find there's very limited or no secondary market for personal bridge loans. This is generally no problem because the borrowers know these are only short term loans. The terms range generally from 3 to 24 months. Therefore, the higher interest rate is of minimum relevance because both lenders and borrowers know the borrowers have an exit strategy to quickly payoff these high ir loans. Most lenders require a viable and verifiable quit strategy before they get will the loans.
Better Points.
Because these loans are short term in nature the hard money lenders always cost discount points. They may charge 1 to 5 points. In addition the private money brokers will demand 2 to 5 points. An average a borrower will 5 to 10 points. Plus closing costs. These are typically high fees. They only be the better choice when an real estate investor is likely to make substantially more money and have no other method to fund the deals.
The reason why Use Hard Money Loan companies.
Simply to make money. As a real estate investor you have choices in financing your promotions. You can choose conventional financing that will require at 30% to 35% down payment for properties that are in good shape. There are many other conventional mortgage criteria which include credit, cash reserves, seasoning of funds and asset. These all make conventional financing extremely difficult.
Another option is to use your own funds and not finance a deal whatsoever. But, most astute the property market investors know that once they can make a world-wide-web profit of $25, 000, $50, 000, $100, 000 or more which has a hard money loan they cannot like the fees but they we pay them versus not making it pay because of lack with financing.
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Getting a hard funds loan with bad credit may be easier than getting a standard loan from a traditional bank. california hard money lenders