Hard Money Loans

If you’re one of the people struggling to keep their business or their houses alive amid the many financial obstacles, then you might want to consider hard money loans.

One of the many good things about this is that a borrower’s credit record does not have that much effect on the loan. The loan itself does not depend on the capability of the borrower to pay but on the property’s worth. If the lender sees that the property has a possibility to sell, the loan is good to go.

Traditional lending institutions such as banks do not give loans like this since the risks are pretty high. This is one reason why hard money lenders charge a higher interest rate than that of a bank. They trust the property’s potential and not the borrower’s capability to pay, thus makes the whole process riskier.
Another good thing about this is it doesn’t take long to close the deal. After the lender has determined the property’s value, the process won’t take long. Usually, conventional loans take about three months to get approved, but not with hard money loans. It is called fast cash because it may only take weeks or days to be approved and released.

Investors who are on the flipping houses and rehabbing business can take advantage of this benefit. Real estate investing has never been this easy.
However, they are not the only ones who can enjoy the benefits of this loan. Obtaining hard money loan can give them more time to either sell the property or pay off their mortgage. In a case like this, a borrower’s income and capability to pay off the loan may be taken into consideration.

To successfully get and use a hard money loan, nothing beats a diligent research. Identify if the loan is fit for your needs. Make use of your time wisely in looking for the right hard money lender. Search real estate investing associations and ask for referrals. The internet is also a useful tool in searching for information and lenders.

One site that can be helpful in your search is www.RehabHardMoney.com.

Author: Daniel V. Mc Grey
Article Source: EzineArticles.com
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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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While commercial hard money loans might sound as if they come out of a Mafia movie, there is nothing dangerous or especially risky about being granted one of the many commercial loans that are on offer by the different independent financial institutions.

What are Commercial Hard Money Loans?

The word ‘hard’ can be misleading for many people who are applying for this sort of financing. All that it means is that the loan is guaranteed by an asset or a piece of immovable property. The loan will be granted on the strength of the value of the asset in question. Many developers use these type of loans when they are attempting to develop a piece of land into a commercial property that has investment potential as well as the potential of future earnings that will more than cover the loan amount.

The value of these loans is that they are usually funded by private investors. It is worthwhile finding a company who is able to match up potential investors to loan applicants. They will ensure that the loan is completely legal as well as being secured by the property itself and not the personal assets of the owner. Most of the private investors in America today are likely to be private firms who consider that issuing commercial hard money loans is a way of doing business that guarantees them a substantial return on investment. These loans are not usually granted over an extended loan term.

This type of loan is not like a conventional mortgage that is repaid over 30 years. The term is usually between 1 and 5 years and the interest rates are much higher than a conventional loan. While the top end of the scale of interest rates can reach up to 15 % it is still a way of obtaining finance for an investment without having to wait for months or go through an extensive process of paperwork and credit checks.

It is always wise to remember that commercial hard money loans will not cover the full value of the property and it is unusual to find any commercial hard money lender that will over about 60% of the value of the property. If you are buying property then you will have to fund the difference from another source or be prepared to fund it yourself. Commercial hard money loans are granted based on a logical and achievable plan to pay the money back on time and most commercial hard money lenders will need to see a considerable amount of property related experience.

They will not be inclined to lend money to first time investors, unless the risk is very low. Commercial hard money loans are a solution to investment opportunities that many banks have refused due to the economy.

To know more information about Commercial Hard Money Loans and Commercial Financing Services visit ICPFinancial.com

Author: Claire Geonzon
Article Source: EzineArticles.com
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When weighed down by excessive debt, it can sometimes feel like bankruptcy is the only way to finally get back on your feet. Yet many people fail to realize just how serious bankruptcy is. A bankruptcy stays on your credit report for a full decade, severely hurting you chances of acquiring a loan and securing reasonably priced insurance. With more and more employers checking the credit or their employees, it can even harm your chances of getting a good job. For this reason, many homeowners are increasingly choosing to consolidate their debts with the assistance of a private party loan.

Hard money loans are derived from the funds of private lenders, and as a result homeowners typically have a much easier time securing one to consolidate their debts. One of the best and more attractive features of hard money loans is that they are based upon your assets, typically your home, so your credit plays a much smaller role in determining whether or not you are qualified. These private lenders don’t have to adhere to banks’ underwriting guidelines, which gives them the freedom to loan to whomever they choose.

But what, exactly, are the primary advantages of consolidating your debts with a hard money loan over bankruptcy?

Brings Debt Relief Much Faster – While everyone’s personal situation is different, for most people debt consolidation with hard money loans may enable you to be relieved of most of your debt within a matter of a few years. By bringing down your overall interest rate of your debt to a much more manageable level, you are able to pay more of the principal every month, just helping speed your way to debt relief. Compare this to bankruptcy, which stays on your credit report for a full decade, and will probably still affect you for years afterwards. While paying off your debts with the assistance of a private money loan may require a few years of belt-tightening, it hardly compares to the financial frustration you will have to endure if you file for bankruptcy.

Better for Your Credit – Of all the negative marks that can appear on your credit report, bankruptcy is the worst. Financial organizations, insurance companies, and even potential employers approach people with bankruptcy with an extreme degree of caution, and may even refuse to do business with them at all. It’s a tough situation to be in, especially considering for how long it lasts. Consolidating your loans into a single hard money loan and paying it off as quickly as you can is a much better long-term credit strategy.

Saves You Money – Consolidating your hard money loans can save you money on two major fronts. First of all, it typically lowers your overall interest rate, which can save you a ton of money on credit cards, which can easily have interest rate that hover around twenty five or thirty percent. But it also saves you money on future loans if you choose to forgo bankruptcy. If in the future you are able to secure a loan after bankruptcy, it will probably come with an extremely steep interest rate, which can be extremely costly in the long run.

Allows You to Take Control of Your Finances – Filing bankruptcy means that you have totally let your financial situation slip away from you, to the point that there is no way that you can get it under control. But most people can take control of their own life if they simply explore alternatives, such as consolidation with a hard money loan. Consolidating your debts gives you the power to get your life back in order without resorting to bankruptcy.

After a career in financial services and four years in lending, Peter L. Brady co-founded D.P.S. Financial Services, Inc., doing business as One Touch Lending. Since 1996 his companies have made loans in California as well as arranging financing in fifteen other states across the country, including Nevada, Arizona and Florida. Mr. Brady has been responsible for the development of marketing programs, the supervision of mortgage production, the supervision compliance, and the supervision of more than 25 employees and 2 branches.

Peter L. Brady also operates Brady Family Financial, a family owned business that originates, funds and services private loans on commercial and residential Real Estate – typically when banks say no.

[http://www.onetouchlending.com/private-party-loans.html]

Author: Peter L. Brady
Article Source: EzineArticles.com
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When shopping for hard money loans online, there are certain things to look for and certain things to avoid. As with any internet transaction, when personal information is requested, the consumer needs to use caution.

The FTC says that con artists have “gone high-tech”. There are numerous reports from people who have been taken in. In many cases, alternatives to conventional financing are the best way to go. You just need to choose your lender carefully. Here, we hope to give you the information that you need to find a legitimate company to deal with.

Many of the companies that advertise hard money personal loans online are payday lenders. While the payday loan is not a true scam, the fees that the companies charge are equivalent to yearly interest rates in the double digits. This type of loan is not the right choice for anyone who has an option, but is definitely wrong for the real estate investor. If you are new to investing, looking to buy, build or flip a property, you should be looking for lenders that advertise rehab funding, construction loans or something similar.

Brokers are another group that advertises hard money loans online. If you use a broker, you are paying him or her to go out and find financing for you. They may or may not be able to provide this service. Avoid the ones that ask for large up-front fees, anything more than a few hundred as an application fee. There have been reports of consumers that paid thousands of dollars to brokers that “guaranteed” financing. Not only was there no loan, they lost the money that they paid to the broker.

Legitimate companies offering hard money personal loans online rarely list their services with a broker. They can do their own advertising. They may have associates that refer clients to them, but the consumer does not pay a fee for the referral.

Remember that anytime an online site asks for credit card or other personal information, they should be a registered secure site. They should have a complete privacy policy available for your inspection.

It is much safer to use a lender that has you send your information to them by regular registered mail, rather than e-mail. They might request a copy of your credit report, but they would not need your credit card numbers. You might feel like regular mail is slower, but it is safer. You could always send the application overnight. You can get pre-approval while you are still looking for the right property, so there is no real need to rush. Not all companies offering hard money loans online have a pre-approval program, so look for one that does.

Currently the FTC lists no complaints with hard money lenders, though there are many with payday lenders, but if you have a concern about a specific company, you can check Federal Trade Commission’s website (www.ftc.gov) and run a search for the company name. If nothing comes up, then no complaints have been filed with that company.

You can definitely find hard money personal loans online, you just have to know where to look.

James has been in real estate for over 30 years and is an expert on residential and commercial hard money loans. He is a regular contributer to Hard Money Guide, a comprehensive resource for those looking to secure funding for real estate projects.

Author: James Whitmore
Article Source: EzineArticles.com
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No one offers instant hard money loans, but compared to the time it takes to obtain conventional financing, it may seem like an “instant”. For real estate projects, such as rehabbing, it will take a commercial bank at least a month to hand you a check, usually longer. Private lenders can get you your money in half that time.

Two weeks is the average turn around time for private lenders. That’s perfect timing if you are about to bid on a foreclosure or an estate sale. That’s about how long the trustees usually give you to pay the balance. Bankers may be keeping longer hours, but they still don’t work that fast and with the economy the way that it is right now, they are denying as many loans as they approve. It often takes two weeks just to get a “sorry we can’t help you”.

There are no instant funding hard money loans, because anytime that you want to borrow a large amount of money, a process has to be completed. Credit card companies might offer instant approval for a few thousand dollars, but that approval is based solely on your credit score. Your credit score alone is not enough to convince a lender that you are a good risk and a few thousand dollars will not help you buy or build a house.

In addition to your creditworthiness, hard money lenders will want to look at your income, your employment history and your experience. They will also want to know that you have a plan. They say that no one plans to fail, but many fail to plan. In the world of real estate investing and rehabbing, planning is extremely important. If you skip the background work, then you may end up with a property that you cannot sell, rent or repair and of course, that means that you probably cannot repay the loan. If you get everything lined up properly, there should be no need for instant hard money loans.

Rehabbers, for example, start by looking for a property that “needs work”. They check out the house, check out the neighborhood, determine what repairs will cost, determine what the “after repair value” will be and then make an offer to the seller. A small deposit will usually be enough to hold the property for a few days. If you get approval from the right financer, you can get a proof of funds letter, so the seller has no reason to look elsewhere for a buyer. If you get pre-approval, you can close the deal within two weeks, so you won’t lose a motivated seller. So, while there may be no such thing as instant hard money loans, there are ways to get funding fast.

Remember, if someone promises you instant funding hard money loans, they’re probably not telling you the truth. You can get money relatively quickly, but it will always take at least a couple of weeks.

James has been in real estate for over 30 years and is an expert on residential and commercial hard money loans. He is a regular contributer to Hard Money Lending, a comprehensive resource for those looking to secure funding for real estate projects.

Author: James Whitmore
Article Source: EzineArticles.com
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Hard money loans are tools for investors, business owners, property owners, would-be property owners and others for whom conventional loans are unattractive or unavailable. Originally, the term was used to describe any loan that was secured by property or other collateral, as opposed to unsecured borrowing, such as cash advances from a credit card or bank line of credit. Today, although the meaning has not really changed, the way that the term is used has. It can all be confusing to the average person, so we hope to shed a little light on the subject.

At one time, it was relatively easy to get a hard money loan. The bank knew that if you could not make your payments, they could take possession of your property. The only real consideration was the value of your property.

Times have changed. Foreclosures take longer. Banks are often unable to recoup their losses. The large number of defaults in recent years has actually hurt some of the financial institutions. Believe it or not, the funds that commercial lenders have available are not endless. Some have had to reduce the number of loans that they make. In general, all lending institutions have adopted stricter qualifications for potential borrowers, in many cases, making it more difficult for individuals to get the money that they need.

Commercial banks are governed by the Federal Reserve and they must follow certain rules and regulations. In addition, each bank has its own policies. We commonly refer to the considerations, rules, regulations and bank policies as red tape. When we apply for a loan, the paperwork can be overwhelming and very difficult for the layman to understand. Read this, initial here, sign there, etc, etc. The red tape is meant to protect the consumer and the bank, but even when you understand that, it can be frustrating. Plus, the whole process takes a lot of time. You might wait weeks, only to hear that your request was denied.

This is where private lenders offering hard money loans may come in. In most of the United States, private transactions are not regulated by state or federal laws. There is less red tape, so you will get your answer faster. There is still no guarantee, but at least you will know that you should look elsewhere for financing in a shorter period of time. There will be less confusion and less frustration. Of course, the policies of individual lenders vary. Some check credit, references and employment. Others are more concerned about how quickly you can repay.

A hard money loan is generally a short term solution. It is most attractive to investors and others that need money quickly, in a matter of weeks, to close on a deal or take advantage of a potentially profitable opportunity. Long term financing may be available, but in the time it takes to find it, the opportunity may be lost.

There are several advantages to hard money loans from private lenders, as opposed to secured loans from conventional lenders (the banks), particularly for real estate investors. Suppose you have the opportunity to buy a property that “needs work”. The seller is particularly motivated because he is facing foreclosure or moving out of state, so he is willing to sell for far below the assessed value of the property, as long as you can close the deal quickly. If you go to the banks, it will take at least 30-45 days (probably more) to close. A private lender may be able to hand you a check in a much shorter period of time.

Time is very important to someone who wants to take advantage of the auction of a foreclosed property or a trustee’s sale. You may have the bidder’s fee, but the trustees typically want the full amount within 14 days. The banks do not work that fast.

For those who can wait for the money they need for a real estate investment, traditional loans might be the way to go. But for everyone else, hard money loans make a lot of sense.

James has been in real estate for over 30 years and is an expert on residential and commercial hard money loans. He is a regular contributer to Hard Money Guide, a comprehensive resource for those looking to secure funding for real estate projects.

Author: James Whitmore
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:

1. No Credit history, tax returns, W-2′s or job history
2. You can make All Cash Offers
3. The property value is used to determine the loan, not your income.
4. Close in a very short time frame.
5. Purchase the property and have the funds available to rehab it in one loan.
6. The Hard Money Lender understands all aspects of rehabbing and can, if necessary, be flexible on their programs.

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:

1. Would I buy this rehabbed home before buying a pre-foreclosure, foreclosure or short sale (distressed properties)?
2. How is the new buyer’s appraiser going to evaluate the home; equal to the distressed properties in the neighborhood or better? Sometimes appraisers don’t look at the upgrades you may have put in to your project. A “budget” buyer might buy the short sale or foreclosed house that needs a little work for less money than what you are asking.

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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Post-crisis traditional mortgage and home equity lending is of no help when money is needed fast. That is why many people turn to non-traditional loans backed by real estate, commonly known as hard money loans. For many this seems to be the only option at a time, despite higher interest rates, points, and lesser loan amounts. Many people, not accustomed to dealing with hard money lenders, have many questions that they have no answers for. Below are some important must-do things necessary to ensure positive borrowing experience.

Do Not Forget To Ask If The Lender Is Licensed

Always make sure that your hard money lender has a state license. License is always a proof of reputability and history of complying with guidelines set by government. Being similar to banks, while not being so closely monitored by government officials, hard money lenders have to have a license. While license is not a panacea, it is definitely an added layer of protection from illegal lending and scams.

Always Perform Due Diligence

Checking your potential hard money lenders is important no less than checking any other business you are planning to deal with. Many people think that since they are to be the recipients of the loan, the lender experience, reputation, and connections are of lesser importance. Always check how long potential lenders have been in business, how experienced the employees are, and what their funding sources are. Collect any references they may have. Such background check may ensure you will get the best deal possible.

Check Your Local Real Estate Market

Well, real estate market is doing badly nationwide; however some areas are better than the others. This is quite important, since generally the better the market is, the lower interest you may get on your hard money loan. Sometimes this difference may be as high as 10 points on your annual percentage rate. Therefore, make sure you know what you may be facing in advance.

Try To Deal With a Reputable Broker, Or, Better, With Direct Money Lender

It is always better to get straight to the source, saving money by eliminating any middlemen. While this may not always be possible, it is highly advisable to look for direct money lenders first. Should you find a few, choose the one that is most reputable. Should your direct money lender search bring no results, it is time to look for a broker. Knowledgeable and competent brokers are as not easy to find, as you may think. Therefore, do as much research as possible before making a selection.

Always Read The Fine Print

Hard money loans mostly feature an extensive fee structure, besides interest rate itself. They usually come loaded with points, sometimes as high as 4-8, and heavy prepayment penalties. While these may be tolerable if you intend to keep your hard money loan for a full duration, they are true money wasters once you decide not to keep your loan for a full term. If that sounds like your situation, and you only need the money for a short period of time, then proceed with caution: always try to find lender that charges minimal points and prepayment fees, if any.

Mary Wise is a personal loan consultant who has been associated with Bad Credit Loans and has more than thirty years of experience in finances. She has helped a lot of people to obtain Fast Unsecured Loans, and many other products regardless of their credit situation. If you want to learn more about Personal Loans you can visit her at BadCreditLoanServices.com

Author: Mary Wise
Article Source: EzineArticles.com
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There are a lot of different loan options out there that you may not be familiar with. Balloon loans, bridge loans,  and many, many more loan types are out there, each offering a different set of advantages and disadvantages, each one potentially just what you’re looking for. If you’re thinking of taking out a mortgage, it may be best to learn a little bit about the alternate options you can choose from before settling on a loan type.

Hard Money Loans

A hard money loan is a type of asset-based loan in which the borrower uses the value of his or her real estate in order to secure a loan. That is, the collateral for the loan is the property itself. Such loans are rarely given by traditional lending institutions, for a number of reasons. These loans are similar to bridge loans, with a few key differences, notably that bridge loans often apply to real estate properties which are in transition. Hard money loans are often used to avoid foreclosure or bankruptcy.

One of the major benefits of this type of loan is that credit score is virtually irrelevant. Because the loan is guaranteed by the property itself, the lender is less interested in your credit history. Additionally, such loans have a low loan-to-value ratio as an added benefit to the lender. A loan-to-value ratio describes the amount of money loaned to the value of the collateral. Usually, a hard money loan has a loan-to-value ratio of about 60% to 70%. If you had a ratio of 65%, then a property valued at $100,000 would guarantee a loan of $65,000.

This lending business took a hit in the late 1980s as the real estate market collapsed, partially due to the overestimation of the value of properties used as collateral in such loans. Because of this, the loan-to-value ratio was lowered significantly to allow for added security to the lender. Hard money loans are largely unregulated, and are provided by commercial lending firms rather than traditional lending institutions.

Because of all the different options out there, and the relative riskiness that can go along with some of them, it can be a good idea to talk to a loan expert before making a decision. For more information about the property loans, visit http://www.mortgagemodificationmaryland.com

Joseph Devine

Author: Joseph Devine
Article Source: EzineArticles.com
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