Tuesday, 28 October 2014

Real Estate Investors Shifting To Hard Money Loans

Now a day’s getting a loan for home could be a challenging job. If you are low on credit as a borrower and you are looking for non owner loan, your situation is more desirable.  Banks are tightening up their lending money standards as credit crunch is now a day brutalizing the financial industry. This means if you do not have enough credit, income and reserve money; the chances for loan approval is minimum. If you are an investor and looking for advantage of today's incredible real estate investment opportunities, this situation might seem hopeless to you; but it doesn't have to be. 

Los Angeles Hard Money Loans have become very popular option for investors. The reason being is that lending hard money is filling the gaps which are not covered by the traditional money lenders. Hard money loans are very in real estate business today because they are taking loans that banks find hard to. Hard money lenders keep balance between property fundamentals and equity positions instead of a borrower’s credit details and history.  Hard money loans will surely cost more than traditional loans and banks, but for investors who are looking to cash in on a great investment opportunity, the extra loan costs might be more than worth it.

Choosing hard money loans

Hard money loans are easier to get than the traditional loans, it doesn’t mean the investors should overlook traditional loans. Typically the main reason the investors would have to choose a hard money loan rather than traditional loan, assuming they could qualify for a traditional loan is the timing. If an investor needs access to funds quickly, borrowing a hard money loan might be their option. Banks tend to have a much defined process when it comes to funding a loan, and getting them to deviate from that process is nearly impossible. Because of this, it typically takes at least one month to fund traditional loans. For example, if an investor needs the funds in five days in order to have then a hard money loan is probably the only option.

Qualifying for hard money loan

Qualifying for Los Angeles hard money loan is straight forward as compared to traditional loans. Hard money lenders used to evaluate the opportunities as they are looking for maximum results and minimum risks, like other investors used to do. Hard money lenders would like their borrowers to have great credit; it is not the number one factor they use to evaluate lending opportunities. The top factors hard money lenders tend to look at is the property fundamentals and equity.  They want to know that in the event the borrower defaults and they would have to foreclose on the property, that is, hopefully they will be able to recover their investment. They will look at things like, the rental marketability of a cash flow. This is good news for investors, because if you find a great opportunity in investment, it is like something that hard money lenders are going to be willing to fund.
Hard money lenders are also looking for equity along with fundamentals of property.  Hard money lenders are not going to lend more than 70% of a property's LTV usually. For investors, though, there is hard money lenders that will lend based on remodeled value. Hard money lenders are a more flexible than traditional lenders, as long as an investment makes sense to hard money lenders, they could fund the deal. They surely have some guidelines that they like to use and keep, however, at the end of the day they can be flexible if they see an investment opportunity that makes sense.

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