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LendingTree LLC introduced the next generation of its loan marketplace, which promises to increase conversion rates. Recently launched PrecisionAds reportedly provide higher conversion rates because users choose lenders based on a comparative shopping session while never leaving the Web site where they first saw the ad. A new cost-per-lead lead-generation platform announced Tuesday by MobileLeads.com enables originators to buy live inquiries through wireless mobile devices.
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Collateralized loan obligations offer investors a “bargain” as relative yields on the notes fall amid a rally in leveraged debt, according to Babson Capital Management LLC.
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Bank of China Ltd., the nation’s third-largest lender by market value, rose the most in almost five months in Hong Kong trading after reporting full-year profit that beat analysts’ estimates on wider loan margins.
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Home loan closings by U.S. lenders during 2010 were around $1.5 trillion. Activity was down from the prior year’s roughly $2.0 trillion. Wells Fargo, Bank of America and Chase originated 56 percent of last year’s business.
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A hard money loan is a very singular type of mortgage in which the loan is secured by a valuable asset such as real estate. This type of loan is most often used for the purchase of business real estate, but in some cases it can be used for private funding. The money itself usually comes from private sources, most often from the area in which the property in question is located.
A hard money loan can be collateralized against the property that the borrower is purchasing. If the structure of the loan is set up this way, the cash value of the loan is usually for about 70% of the quick sale value of the property itself. Because the loan is secured against real property, a borrower usually opts for a hard money loan as a last resort in times of financial distress. Sometimes it is the only form of financing possible, since credit score isn’t a huge factor in qualifying for the loan.
Private capital investors rarely take a look at a person’s credit rating, more often paying attention to the money making capabilities of the venture they are financing. Due to the structure of the loan as it relates to the value of the collateral, it is rarely the whole source of financing for any given project. Interest rates for hard loans are usually a bit higher than a standard mortgage. While the interest rate may be somewhat regulated by government agencies so it doesn’t get too high, hard money loans are not very tightly regulated. The rules of the industry are so different from the standard financing field that normal rules don’t apply. In an almost comical turn of events, the nearly complete deregulation of the industry has allowed hard loans to be incredibly speedy and efficient, now that government has been taken out of the equation.
A hard money loan, therefore is often a good source of quick capital for ailing businessmen. Unfortunately, predatory lending tactics aren’t uncommon, driving up the price of the loan. If you see yourself in the market for a this type of loan, make sure you use a professional real estate attorney, or you could become a victim yourself.
Mike Finley has been a title abstractor for over 10 years in the real estate housing industry. He now gives you his incite into home foreclosures so you can benefit from them and help take them off the market. For more information on how you can take advantage of his experience visit: http://www.forclosedhomestoday.com
Author: Mike Finley
Article Source: EzineArticles.com
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If you own real estate whether it is single family home, condo, apartment building or a commercial property, in this economy, chances are you already know about Hard Money Loan.
Basically a hard money or a private money loan is a sub-prime loan. A lender puts more emphasis on the security rather than your income and credit. When you go to a pawn shop to pawn an item, the shop owner does not care what you do for living, how much you make, and what your credit score is like. He only cares for the value of that time and that too a firesale value.
Similarly, a private lender, looks more at the value of your real property and how much equity you have in it. If the property is worth a million dollars and you owe $300,000. You can borrow $200,000 to $300,000 more on it easily. The formula lenders use is called loan to value ratio. In most cases you can get a loan up to 60% loan to value ratio.
Qualifying for this kind of loan is less stringent as compared to a conventional loan especially when it is a non-owner occupied or a commercial property. Debt ratios are liberal and credit score has little consideration. If you had great debt ratios and good credit score why will you be applying for a hard money loan? So, if your hard money lender is asking you for your credit score, you need to call someone else.
The Pros are it is fast. In most cases you can get funds as fast as five working days. Qualifying, as mentioned above, is a lot easier. Without hard money loans lot more people will lose their properties. Hard money or private money loans fulfill an important need in the society. It is a bridge loan and can be a great relief. It is also called a band-aid loan.
The Cons are it is short term. generally no more than seven years. Mostly it is from one to three years. It is interest only. Interest rate is high, from 10 to 12%. Fees are high. Expect to pay three to 6 points.
Not everyone who gets a loan like this has credit or income problem. In this economy, more and more people who are borrowing private money have good credit and good income but somehow cannot get a bank or a conventioanl loan for one reason or the other. Banks are taking months to close a loan.
Money for funding these loans comes from private investors; from retirement; hedge funds and Trust Deed Investors.
Get more information on http://www.saratogabancorp.com
Amarjit Ahluwalia is the author of Make Your Money Make Money For You – a step by step guide to Trust Deed Investments. The book shows you how to earn 10% or more on your savings.
Keep in mind money is not power, knowledge is.
For more information on Hard Money Loans go to http://www.saratogabancorp.com
Author: Amarjit Ahluwalia
Article Source: EzineArticles.com
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What is a Hard Money Loan?
Hard money loans are a specialized type of real estate backed loans. Hard money lenders or private lenders provide short-term loans based on the value of real estate that has been collateralized for the loan.
Hard money loans typically have a much higher interest rate than bank loans because they fund deals that do not conform to bank standards and have higher risks. Hard money loans are more expensive than traditional loans because they are not based upon traditional credit guidelines. Hard money lenders may not require the income verification, credit score, etc. that typical lenders do, but their interest rate and points are higher.
“Points” on a hard money loan vary widely, some lenders may charge 1 to 3 points, while other lenders may charge up to 7 or 8 points. Some lenders base the points charged on the rehab experience of the borrower with regular clients getting reduced points the more business they do.
New rehabbers should not do more than 1 project at a time, especially in this economy. You don’t want to be stuck with a couple of houses when you do not have the finances to maintain them until they are sold. Also, as a new rehabber, you should get yourself registered (qualified) with a Hard Money Lender first so you can act fast when you find a house to rehab. You will able to get a “proof of funds” letter quickly from your Hard Money Lender to be qualified as a cash buyer. It is important to be a cash buyer since the sellers of foreclosed or distressed properties want fast deals. In fact, most ads or MLS listings require a pre-approved buyer and request the proof of funds letter to be submitted with the purchase contract. With most Hard Money Lenders, it is not difficult to get qualified. Usually it takes a simple application, a bit of information about your experience or lack thereof and some personal information.
The advantages of using Hard Money Loans are:
THINGS YOU NEED TO THINK ABOUT WHEN PURCHASING A HOUSE FOR REHAB
Pricing your home is one of the most important aspects of your rehabbing. You should determine a selling price when you purchase the property. However, sometimes things change and the original price you calculated to sell it is not longer an option. Always remember that you make a profit when you BUY the property, not when you SELL it!! This means that if you do not make a wise and well thought out purchase, there is no way you are going to make money. It just doesn’t happen because you want it to happen. This is a process that needs to be calculated to the end and that includes the SALE of the property after it has been rehabbed.
Pricing: Realize that because of the economy and the current housing market conditions, there are many properties on the market. Some are in great shape, some need a little work and some need a lot of work. Also there are a lot of pre-foreclosures, foreclosures and short sales. Ask yourself some questions:
Test the neighborhood:
1. Are there many distressed properties in the area?
2. Are there a lot of vacant lots?
3. Do the neighbors keep up their properties?
4. Are there schools nearby?
5. Are shopping areas convenient? Within walking distance?
6. Are there streetlights and sidewalks?
7. What about transportation? Bus lines? Train Lines?
8. Do comps in the neighborhood. Have your Realtor pull rehabbed properties in the same area that have recently sold (within 6 months), or do drive-bys yourself and look up the comparables with www.zillow.com or www.realtytrac.com. These sites will give you approximate values and can help you make the decision whether this is the right house to buy for rehab. Don’t fudge the numbers. Make sure you comps are similar size, number of bedrooms and baths, design, frame or brick, etc. If one or more of your “test items” does not work out, then move on to another property.
All of this must be considered when making a purchase for rehab.
The actual funding of the deal, the paperwork and how it works will be discussed in my next article.
I have ten years experience in Real Estate Investing. As a Real Estate Broker with my own company, I have personally rehabbed properties and wholesaled single family and two-flats in the Chicago area.
I am currently writing E-Books on Real Estate as an Investment, Hard Money Lending and Rehabbing for Profit that will be available on my website at http://www.RealEstateRehabProfits.com. Hard Money Lending criteria is available on the website http://www.zdeinvestments.com
I will also continue contributing shorter articles on many subjects pertaining to Real Estate.
Author: Rebecca A Miller
Article Source: EzineArticles.com
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Why A Hard Money Loan.
The reason real estate investors choose to use hard money loans is that they are a source to purchase and rehab property to make a substantial profit that they may not have without the use of this expensive money. These short term loans are expensive and even if they were legal for a home owner to borrow from the private lenders offering these loans it would never be advisable. So how hard are these short term loans, you ask? The answer is threefold. They are restrictive in loan to value, they are high in rate and high in fees.
Restrictive in Loan to Value.
The maximum loan to value for most private loans range from 50% to 75%. No deals are done at the higher loan to value for two reasons. First the hard money lender requires lots of equity in case of default they can list and sell the property quickly because they will in theory be below market value. The reason I say in theory is because there are so many REO’s, Short Sales and foreclosure properties on the market today that what was normally considered an exceptional deal is common place. Therefore, private lenders are more particular about the properties, borrowers and loans they choose to fund.
Secondly, any real estate investment that has less than 30% equity are not good investments for the investors unless they are purchasing the property for the cash flow. In that case they are long term investments and not suitable for the short term nature of these expensive bridge loans.
High Interest Rates.
Whether as n real estate investor buying and or rehabbing commercial or residential investment real estate the interest rates are much higher than conventional commercial or residential investment lending. The rates are higher much because the risks are much higher and there source of 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 there is a very limited or no secondary market for private bridge loans. This is generally not an issue because the borrowers know these are only short term loans. The terms range typically from 3 to 24 months. Therefore, the higher interest rate is of minimum importance because both lenders and borrowers know that the borrowers have an exit strategy to quickly payoff these high interest rate loans. Most lenders require a viable and verifiable exit strategy before they make will the loans.
Higher Points.
Because these loans are short term in nature the hard money lenders always charge discount points. They may charge 1 to 5 points. In addition the private money brokers will charge 2 to 5 points. An average a borrower will 5 to 10 points. Plus closing costs. These are high fees. They only make sense when an real estate investor will make substantially more money and they have no other way to fund the deals.
Why Use Hard Money Lenders.
Simply to make money. As a real estate investor you have choices in financing your deals. You can choose conventional financing that requires at 30% to 35% down payment for properties that are in good shape. There are many other conventional mortgage criteria including credit, cash reserves, seasoning of funds and property. These all make conventional financing almost impossible.
Another option is to use your own funds and not finance a deal at all. But, most astute real estate investors know that if they can make a net profit of $25,000, $50,000, $100,000 or more using a hard money loan they do not like the fees but they we pay them versus not making any money because of lack of financing.
Louis Jeffries has been a Mortgage Banker for over 20 years. A Investor Rehab Specialist Louis will help you fund you next rehab or construction project. Contact Louis louisj@alldominionmortgage.com 708-299-3244 Visit The Blogs Investor Rehab
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Author: Louis Jeffries
Article Source: EzineArticles.com
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One of the best scenarios for commercial hard money loans is when the borrower has an opportunity that he knows he will make a substantial amount of money on, needs to move on it immediately, and regardless of the fees the hard money lender charges. With this scenario the profit the borrower will make will easily offset the fees the borrower has to pay to the commercial hard money lender.
Commercial Hard Money Loan – Scenario 1
For example, we have recently worked with a borrower that had an opportunity to purchase a fleet of trucks for his business at a 50% discount. Total purchase price on the trucks was just over a million dollars with a value over $2,000,000. On the commercial hard money loan the borrower had to pay 3% in fees in order to get the loan or $30,000, to be able to save over a $1,000,000 of needed trucks for his business. He collateralizes the commercial hard money loan with his building and was able to close in 3 weeks. So $30,000 in fees to save over a $1,000,000…
Commercial Hard Money Loan – Scenario 2
Another similar example is when a borrower wants to purchase a property from a distressed seller at a substantial discount. Typically the seller can’t wait 60 to 90 days to close a conventional commercial real estate loan and instead needs to close in a few weeks or will not offer the discount.
So say the property is really worth $2,000,000 but the seller has agreed to $1,500,000 a $500,000 discount. The buyer would get a commercial hard money loan at 60% of the purchase price or a loan amount of $900,000 and pay say 5% or $45,000 in fees to the commercial hard money lender. So the borrower would save $455,000 by taking advantage of the opportunity. In this case most borrower wouldn’t care (at least that much) about paying the commercial hard money lender their points because of the amount of money they make off the deal.
In general these type of scenario are much easier to close than the bankruptcy/company turn around/debt consolidation type situation. Many commercial hard money lenders no longer look at deals like this.
Jeff Rauth is President of Commercial Finance Advisors, Inc out of Birmingham, Michigan. He has a STORE for commercial loan brokers. Contracts, spreadsheets, books, etc. Products starting at $4.95! Check it out commercial real estate loans or Commercial Hard Money Loans
Author: Jeff Rauth
Article Source: EzineArticles.com
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