Hard Money Loans

Ottawa, Ontario, Canada (AHN) – Analysts foresee an interest rate increase by the Bank of Canada soon. Last week, a group of economists from the private sector and educational institutions from the C.D. Howe monetary policy council recommended a key lending rate hike to Bank of Canada Governor Mark Carney.

They suggested a 25 basis points hike on Tuesday, when the Canadian central bank’s monetary committee meets and decides if it will keep the current rate of 1 percent or hike it to 1.25 percent. The group is even pushing to bring the key lending rate to 2.5 percent by the end of 2011.

New monetary committee member Sheryl King, chief economist of the Bank of America Merrill Lynch, is in favor of an interest rate increase because the benchmark rates are already considered too low for the amount of growth projected for the next 12 months.

King also blamed the very low interest rates for the record-high debts incurred by Canadian households, currently at 148 percent of disposable income.

Bank of Canada Deputy Governor Agathe Cote confirmed that because of the lower interest rates on secured loans, consumers use up to one-third of the loans to pay other debts. Another one-fourth in used to invest in financial assets and the balance used for current consumption and renovating or buying another property.

This, in turn, has caused home equity lines of credit and loans to surge at almost twice the pace of mortgages over the past 10 years, or 12 percent of overall household debt.

King and bank analysts, however, doubt that a key lending rate hike will take place on Tuesday,

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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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Ottawa, Ontario, Canada (AHN) – The United Arab Emirates stoked the fire on the escalating diplomatic conflict between Dubai and Ottawa by increasing tourist visa fees for Canadian nationals to $1,000.

The higher fee, which UAE hiked only for Canadians, takes effect Jan. 2, 2011.

The UAE embassy in Ottawa posted the higher visas fees in its website. The new fee will be for a six-month visa. Fee for three-month visa will be $500 and one-month visa $250.

However, to mask the diplomatic vengeance exacted by UAE after Canada rejected the emirates’ request for more landing rights for two UAE-owner airlines, the website claims Dubai’s 35-year ties with Ottawa is strong and flourishing.

In addition to skyrocketing visa fees, the UAE kicked out Canadians troops from Camp Mirage in Dubai, which Canadian troops have used for 10 years as a deployment point for Canada’s military operations in Afghanistan.

UAE air carriers are not yet implementing the higher visa fees. According to the Etihad Airlines portal, they can help Canadians seeking a one-month tourist visa for $83, which is the rate most Dubai-based air carriers charge.

The new fees is expected to result in a drop in number of Canadians visiting UAE. At present there are over 25,000 Canadians living and working in the emirates, who have family members and relatives visiting them in UAE.

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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
Hard Money

Author: Louis Jeffries
Article Source: EzineArticles.com
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With residential foreclosures on the rise in the US, many homeowners are finding themselves in situations they never though they would be in. With adjustable rate mortgages coming out of their fixed period, the opportunity to refinance into a secure loan has diminished as lenient lending policies have become a thing of the past. Additionally, individuals who have been previously classified as “sub prime borrowers” are now finding it more difficult than ever to refinance.

With borrowers who have previously provided little or no documentation, where would they go today when times get tough? Mortgage banks today are being extra cautious even with borrowers who achieved levels of creditworthiness. Private lending companies are emerging to satisfy clients who fall into these cases.

Hard money loans traditionally carry higher interest rates than loans made from banks. Many times they require that the borrower have a certain amount of equity in the home. Many hard money and private lenders will tailor the contract and agreement to make it a beneficial solution for all parties involved.

Hard money lenders in the past have developed a negative reputation for “loan sharking” money at high interest rates and seizing properties should the borrower fail to make a payment. Today, a hard money loan might make the difference in being able to stay in a property and prevent a potential foreclosure.

When used properly, a private mortgage loan can buy a borrower the time to make necessary life and financial changes to prevent a foreclosure from happening. A hard money loan today can be a very useful tool and a life saver for a sub prime borrower from losing their home.

Before accepting a hard money loan, keep the following in mind:

1) Research a few hard money lenders in your area and discuss your situation and the terms of the loans being offered to get a sense of the market and how you fit in.

2) See what a few lenders are offering you and be prepared to negotiate. Every dollar and fee is important and needs to be understood. Remember, these loans are negotiable as it is mutually beneficial for both parties.

3) Do not accept a loan amount greater than you need. You will be more likely to spend that money (which comes at a much higher interest rate) and have to pay it back over the life of the loan.

4) Involve your accountant and real estate attorney. They may put you in touch with a reliable company that will not put you in a more difficult situation if things should turn for the worst. Their relationships and referral volume may end up getting you a great deal.

5) Private lending is a profitable business and lenders are always looking to mitigate their risks while helping others. Be honest and upfront with the loan officer regarding your situation. It may be the difference in getting a loan with a lower interest rate and more favorable terms.

Your story is important to the loan officer so being truthful is key. As borrowers are approaching foreclosure many feel their pride is at stake and are embarrassed and ashamed about their situation. Being proactive and honest as a borrower is the first step on the road to financial recovery and hard money lending today is becoming a popular and useful solution.

Nicholas Cuttonaro is a successful mortgage professional and publisher of http://www.MortgageLoanDetails.com

Author: Nicholas Cuttonaro
Article Source: EzineArticles.com
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Detroit, MI, United States (AHN) – General Motors is looking to fill 1,000 jobs in Michigan. The new hires would develop more electric and hybrid vehicles similar to GM’s Chevrolet Volt, which the auto manufacturer rolled out Tuesday.

GM Chief Executive Daniel Akerson said the new jobs will be in engineering and research as the company attempts to have more offerings in its lineup of energy-efficient vehicles. Akerson added the concentration of new jobs in Michigan seeks to help ease unemployment in the state, which has the second highest unemployment rate in the country next to Nevada.

About 800,000 jobs were lost in Michigan in the last 10 years as demand for new cars slumped, leading the state to suffer from a 12.8 percent unemployment rate.

Akerson said the electric car would be one key to help revive the global automotive industry, which suffered a decline at the height of the financial crisis and had to be bailed out by the government to the tune of $50 billion.

The Volt was named by Green Car Journal the Green Car of the Year. It is the first electric vehicle to be given the award. Chevrolet Vote runs purely on electricity for 25 to 50 miles on a single charge.

The manufacture of electric cars has led to a boom in production of batteries and other auto parts needed by electric cars. So far 17 firms are manufacturing batteries or battery parts, which is expected to create 63,000 new jobs in Michigan over the next decade.

On Tuesday also, Chryler said it would hire 1,000 new engineers and technicians in early 2011 to work on next-generation small and midsize vehicles.

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Economists say the country’s economic growth is slowing and this raises fears that the government has done too little and acted too late.

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The Reserve Bank has cut the repo rate by 50 basis points to help stimulate the economy.

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Cash requirements are the very basic thing that happens to all. We need cash for uncountable things but we don’t get that much cash every time. Moreover, the conditions get more worsened when you need instant cash and there is no one to help you out of this. No more worries for such situations! Now the pain relievers for such hard hitting hassles have arrived. Many financial institutions are providing payday loans as the answer to that need.

When you need cash for a short duration like until your next payday, then these loans are the best possible alternatives with very less faxing. You can avail these credits for the short duration. Moreover, these come instantly. Only after a few hours of applying for these loans, you will be sanctioned the loaned amount and you can relieve your needs then.

These ways of obtaining funds get the importance over the other types as these require very less paper work and are processed very quickly. The best benefit of such types of credits is that these are totally unsecured. You are not required to keep anything as collateral to obtain such funds. However, the interest rates for such funds are a bit high. The high interest rate is because of its qualities like short term period, no securities required for collateral, less paper work and instant approval.

In UK, for obtaining such loans you are required to have come of age that means you have to be of at least 18 and you should have fixed monthly income. If you fulfill these criteria then you are eligible to get the cash compare payday loans.

The amounts for such credits are generally low and may swivel from £100 to £1500. These are totally dependent on your monthly salary that estimates your repaying capability.

To get the best and fastest payday credit with the least rate of interest, internet can be of great help. You may find numerous web portals that claim to offer the best payday funds with less interest. But before going for any, patiently comparing will surely add to save money feature.

Car loan companies work very hard to offer the most competitive car loan rates, particularly to those who have good credit. They know that good and excellent credit borrowers have many options available to them. In order to get their business, they have to offer the lowest rates possible.

The same isn’t true for those with poor and bad credit. Car loan companies know that these borrowers don’t have many options. Often they are more interested in just getting the financing than in what it costs. Many borrowers want an car loan without cosigner because they know finding a cosigner with good credit is tough. Unfortunately, they are often disappointed and realize that a good auto loan without a good credit cosigner just isn’t really possible.

Another commonly sought after loan for those with poor and bad credit is referred to as guaranteed car financing. In this circumstance, the loan relies primarily on the applicant’s job and income. If both can be well documented and appear stable, this serves as the basis for the loan. In some circumstances and if the seller is determined to make a loan, they will ask for money down and etc. All designed so their guaranteed auto finance is actually offered. In many cases the loan can almost be worst than not having a loan. A high interest rate and onerous terms can become very burdensome over the length of a loan.

At the end of the day, the best way to get car financing companies to give you their best low rate car loans is to have as good credit as possible. If that’s not the case, expect high car loan rates and make plans to live with it.

About Author
At Loansstore is an expert in guaranteed car financing field and has dedicated the past 10 years to helping consumers understand their rights to getting an auto loan after bankruptcy.