Category Archives: Hard Money Loans

Questions on Hard Money Loans

Q 1 What Loan-to-Value are Hard Money Lenders looking for?
Typically a loan does not exceed 70% of the after-repaired-value (ARV). This figure is calculated by an appraiser and consideration of repairs.

Q 2How long is the loan for?
Typically write the notes from 3 months to 12 months depending on the Lender and your needs. Longer the term can lead to increased costs or interest rate.

Q 3 what are the costs?
All loans will require Title Policy, Insurance, and Appraisal. These services come with fees that can range from a few hundred to a couple of thousand dollars. Most require origination points ranging from 2 to 10 points.

Q 4 Do I need to put any money down?
In most cases, Yes Most lenders want to ensure that you have enough resources to finish the repairs and cover the costs of the loan plus any surprises. Expect to pay all origination/discount points and other costs at or before closing. If you cannot afford to close you typically cannot afford to take out this type of loan.

Q 5 How does Hard Money compare to a traditional non-owner occupied investor loan?
This would be like comparing apples to oranges. Hard Money has a very specific purpose. Typically these loans are for quick turnaround or after repair situations. Conventional financing is used for your traditional rentals and long term hold scenarios. As the foreclosure market increase you will find investors to use Hard Money as way to secure the property in a short period of time then refinance into Conventional finance.

To learn more about our financing solutions for Hard Money Loans, please call us at (323)655-6888 or visit us at www.magnaloans.com

Qualifying for a Hard Money Loan

Qualifying for hard money loans tends to be more straight forward than traditional loans. When looking at hard money loans, remember that hard money lenders are themselves investors. When hard money lenders evaluate loan opportunities they are looking to maximize returns and minimize risk – just like every investor. While hard money lenders would love their borrowers to have great credit, it isn’t the number one factor they use to evaluate lending opportunities. The top factors hard money lenders tend to look at are property fundamentals and equity. They want to know that in the event the borrower defaults and they have to foreclose on the property, that they will be able to recover their investment. They will look at things like the rental marketability of a property, cash flow, and so on. This is great for investors, because if you find a great investment opportunity, it is likely something that hard money lenders are going to be willing to fund.

Along with property fundamentals, hard money lenders are also looking for equity. Typically hard money lenders aren’t going to lend more than 70% of a property’s LTV. For investors, though, there are hard money lenders that will lend based on repaired or remodeled value. Again, hard money lenders can be a lot more flexible than traditional lenders. As long as an investment makes sense to a hard money lenders, they may fund the deal. They certainly have some guidelines they like to use and keep to, however, at the end of the day they can be flexible if they see an investment opportunity that makes sense.

Private Money Lending by Hard Money Lenders

Hard money lenders are hard money loan lenders. Hard money loan is nothing but a typical loan where the loan is backed up by the property itself for which you are taking the loan. Private money lending is the process of loan lent to an individual or organization by the private individual or investing companies. There is a high risk of losing for both the lender and the borrower though. Hard money lenders are similar to private money lenders for real estate investments.

Many estate owners needed funding and the private money lenders are helping them to fund their properties. In this case, you will have to go to the less legal actions to have a certain amount for money lending, the advantages of having private money lending are as follows:

1) Always lend you money even if you don’t have acknowledged credits and documents.

2) You can get the loan within a couple of weeks when you need a quick financing like in case of arrears due to mortgages.

4) Though by private money lending options you get the money quickly, the interest rates are high and more points are charged on loans sometimes.

5) You can have a strong, private money lender on a word of mouth which will make you find a trustworthy individual who will be right at your service.

In general a private money lender lends money up to 65% to 70% of the quick-sale value of the property. So private money, lending person gives money on higher risks and thus charges a whopping percentage of interests. So the private money, lending is providing an important service by funding real estate’s when you are at a low. It may cost you a little more than usual but decrease the general red tapes for a loan.