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Why Borrowers Use Hard Money Loans?

1. Bad Credit Records:
Traditional lenders love borrowers with excellent credit scores, but if a borrower has a damaged credit record it is very difficult to get loans through institutional or conventional lenders. Banks barely look at the borrowers and qualify them before looking at the collateral. Whereas, hard money lenders are the opposite. They always care about the property and make sure they are in a very strong position and less about the borrowers.

2. Documentation of Income:
This is a second big reason for borrowing hard money loans. It is also very difficult to get financing from Banks if you are unable to prove your income. Hard lenders care very little about income and understand that self-employed debtors often have more income than they can show. Hard money lenders want to see solid deals and money in the bank. After having the confirmation that the loan payments will be made based on the money the borrower currently has, lenders will do the deal.

3. Time Frame:
The time it takes you to get money can be crucial when you are buying from someone who wants to close quickly. The time frame is one of the biggest reasons that borrowers always prefer to use hard money loans. A conventional mortgage takes so long time to close the deals, sometimes more than 30 days. With a hard money loan, you can usually close within a week, sometimes less.

4. Property Type:
Conventional banks usually offer loans for Single-family homes including 2-4 units and some types of commercial property, but properties that are distressed cannot be approved for a conventional mortgage loan. Hard money lenders lend for all types of properties that fall outside of the conventional parameters likes rehab loans, construction loans, bridge loans, land loans, mixed-use property, non-owner occupied rentals used to secure startup capital for new ventures. Hard money loans are designed for distressed properties and are used by investors looking to buy and renovate, either to flip or refinance and keep as a rental.

5. Loan Term:
Most conventional mortgages have interest rates that are fixed for 30-years and are fully amortized. Hard money loans are interest-only and typically have a term of 1 year or less.

6. Customer Services:
Traditional financing is much difficult to get even if you do qualify.
Sometimes, borrowers find it hard to work with traditional banks even if they qualify for the loans. In conventional loans, the underwriters are always looking for reasons to refuse loans so they take a long time and collect a lot of papers. Hard money lenders look at the same documents but it is easier to work with them and they don’t try to kill the deal. Customer service is also better because you are dealing with individuals that understand the business.

7. Down Payment:
Traditional lenders required a big amount of down payments and rarely finance repair works. Hard money lenders usually loan a much larger part of the purchase and repairs. With the lower down payment, borrowers get into deals easily and able to do more deals. This increases his ROI much higher.

The Bottom Line:
Hard money loans are the first choice for those who have made financial blunders in their past including late payments, limited credit, collection accounts, unemployment or laid off, judgments, liens, and charge-offs. If you are the same who made such mistakes, hard money loans would be the last and best option for you.

If you have any questions about getting a hard money loan or a private loan, don’t hesitate to contact our team at Magna Capital Group, Inc. We are one of the well-known names for hard money loans in California offer the best lending option for every borrower. For more information, contact us today at (310) 734 4044 or email at info@magnaloans.com.

What is a cash-out refinance?

A cash-out refinance replaces your existing mortgage with a new loan for
more than you owe on your property. The difference goes to you in cash
and you can spend it on home improvements, debt consolidation or other
financial needs. You must have equity built up in your house to use a cash-
out refinance.

Pros of a cash-out refinance
There are many advantages to using a cash-out refinance over other types
of loan products if you need a large sum of money. Here are some
common reasons to use a cash-out refinance:
 Get a lower interest rate on your mortgage – This is the most
common reason why most people do a traditional refinance, and it
makes sense for cash-out refinancing, too, because you’ll be taking
on a larger loan.
 Make value-added home improvements or repairs to your
property – property owner who use cash-out refits for these types of
projects can deduct the mortgage interest from their taxes if these
projects substantially increase the home’s value. Also, tapping your
property’s equity could be less expensive than other forms of
financing, such as personal loans or credit cards.
 Consolidate and pay off high-interest debt – This move might
make financial sense, but make sure the math checks out, says
Cash-out refinancing is beneficial if you can reduce the interest rate
on your primary mortgage and make good use of the funds you take
out

What is a CMBS loan?

CMBS loans are also known as commercial mortgage-backed securities or conduit loans. These loans are used to purchase commercial real estate buildings like multifamily properties office buildings, or warehouses. They typically offer flexible underwriting standards and use the property as collateral.
That said, a CMBS loan is different from a traditional commercial loan. With a traditional commercial loan, the lender gets paid back over time. However, a conduit loan will be sold and packaged along with other commercial mortgage loans into a trust called a Real Estate Mortgage Investment Conduit (REMIC), turned into bonds, and sold on the secondary mortgage market to bond investors. This process is known as securitization, and it’s where these loans get their name
The advantages of CMBS loans
The main advantage of choosing a conduit loan is that these loans typically offer a better interest rate than a traditional commercial loan. They also usually offer a fixed-rate option, which can give you the ability to plan for your payments more effectively.
Additionally, CMBS loans are nonrecourse loans, which means that the buyer is not held personally responsible for paying the loan. However, some of these loans do have a clause stating that if you intentionally cause harm to the property, your CMBS lender, or your investors, you could be held liable.
Lastly, these loans are assumable, so if you decide to sell the property in the future, the buyer can take over your CMBS financing and your interest rate. However, be aware that most lenders do charge a fee for this service.

Is A Commercial Bridge Loan Right For Your Business?

A commercial bridge loan is a right choice for every business. How do you determine if your business will benefit from a bridge loan? There are a few things to consider.

However, if you need funds for one of these reasons, consider speaking with a lender:
•Close A Deal Quickly: When the real estate market is hot, you have to strike quickly, or you’ll get left out in the cold. Lining up a mortgage or long-term loan can take weeks or even longer, and by that time, you may have lost out to another buyer. If you want to purchase a commercial property fast, you can get the funds you need with a commercial bridge loan, which buys you enough time to secure another source of funding.
•Work On Your Credit: Is your credit preventing you from getting a mortgage or a bank loan? If so, making a purchase using a bridge loan may be a wise choice. If you need to make a purchase now but also need to work on your credit (i.e., paying off debt or disputing erroneous items on your credit reports), bridge loans provide you with the capital you need until you’re able to clean up your credit and obtain another loan.
•Acquire A Business: If you plan to purchase another business, time is of the essence. Instead of waiting on funding, a bridge loan can help you push the deal forward quickly.
•Renovate Your Property: If you want to improve your business to draw in new customers, a bridge loan can help you get the ball rolling on renovations sooner rather than later

To receive a free consultation and confidential evaluation of your loan scenarios, please contact us at
info@magnaloans.com

Who Should Use a Hard Money Loan?

Real estate investors choose to use hard money for many different reasons. The main reason is the ability of the hard money lender to fund the loan quickly. In most situations, hard money loans can be funded within a week. Compare that to the 30 – 45 days it takes to get a bank loan funded. The application process for a hard money loan generally takes a day or two and in some cases, a loan can be approved the same day. Good luck hearing back about a loan approval from your bank within the same week!
The ability to obtain funding at a much faster rate than a bank loan is a significant advantage for a real estate investor. Especially when the real estate investor is trying to acquire a property with many competing bids, a quick close with a hard money loan will get a seller’s attention and set their offer apart from the rest of the buyers offering slow conventional financing.
Another reason a borrower may choose to use a hard money loan is that they have been rejected by the banks for a conventional loan. Life doesn’t always go as planned. Short sales, foreclosures, credit issues… they happen. Another important thing banks need to see is income history. If a potential borrower recently started a new job, the bank may deny the loan request due to insufficient income history, even if the borrower makes a healthy income. Hard money lenders are able to look past these issues as long the loan be repaid and the borrower has enough equity invested in the property.