Monthly Archives: August 2014

Some Basic Information about hard money lenders

Today, a very few hard money lenders truly understands the concept of fix and flip investing. Below is the list of various types of private hard money lenders available:

1. Commercial hard money lenders
2. Residential hard money lenders
3. Bridge hard money lenders
4. Development hard money lenders
5. High end home hard money lenders

You can choose the private hard money lender based on your requirement from the above given options. Usually the investors choose residential hard money lenders.

Bank type lenders – Borrowing from bank types lenders is similar as obtaining financing from a typical financial institution like banks. To be qualified for such loans you have to follow a set of certain guidelines, But usually these guidelines do not go well with  the real estate investors working on a fix and flip situations.

Private hard money lenders – These lenders always work with a group of private hard money lenders who lend money on a regular basis. They have their own set of rules and regulations and they make their own decisions to control the entire process of lending. Due to their simple rules and encouraging guidelines, the investors find them the most suitable option.

Fix and Flip Private money lenders – A very few residential hard money lenders are into fix and flip loans. Being a real estate investor, it can be a difficult job to find money if you want to buy a property that you have taken under contract.

At last when they find these lenders, their loans get dismissed because of the issues in that specific area and the investor will search for an alternate property. However, the lender will reject their loan application because of the decrease in the real estate market.

Hence, the investor keeps looking for various properties. You still have an option of finding few hard money lenders, who can provide you loans to fix and flip properties.

How Does Your Credit Score Affect Your Mortgage Rate

Credit Score is the most important thing when we talk about mortgage rate. This number is monitored by credit bureaus and the major ones are Equifax, Trans Union, and Experian.

What is the way to determine your credit score? There are numerous factors that are collectively responsible to create your credit score. However, some of the major factors are used are: the amount of credit you have, your payment history and your type of credit. Your credit score comes between 350 to 900 and the lower is the number the worst is your score and this is the signal to the lenders that you are much more of a lending risk. If you have a lower score and lenders finds it riskier to lend money to you, then your mortgage rate will be pretty higher than compared to someone who has a higher credit score. If you have a higher score, you will be given a much lower mortgage interest rate.

People with credit scores between 760 to 900 often get the best mortgage rates and it is easier for them to get a purchase mortgage. If your credit score is lower than 620, you come under “subprime category” and you will have to obtain special mortgages as traditional ones will be very difficult to get, if at all.

And the one who has credit score 500 or less than this will find it difficult to get a mortgage. However, people under credit score 500 can get a mortgage through a “hard money” lender. These hard money lenders can give the mortgage no matter what credit score you have but you will have to place at least 50 percent cash down for the purchase.