The process for Getting Hard Money Loans?
Hard Money Loans provide Investors easy access to capital to purchase properties. They can fund more quickly, typically within 72 hours of receiving the final docs from the entitled Company. Hard Money is available for adequately collateralize loans on single-family residential houses and other Real Property including commercial projects.
How do You deal with lenders?
After doing your homework, you should speak directly with a loan officer or principal of the company to learn more.Take your time on the phone, and ask questions about how they do business, what they cost, and what they need from you and from the borrower. Make sure to ask if the person or company is a lender or a broker. Do they fund with their own money? Do they have funds available now? And can the lender provide some examples of recently closed loans? Don’t forget to take notes.
If the conversation goes well, a lender may ask you what kinds of deals you have on your desk that it might be interested in. Be ready to talk about any deal you have that is seeking hard money.
What Will It Cost?
All loans will require the 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.
How does Hard Money are Compare to a Traditional non-owner occupied investor loan?
Typically these type of loans are for quick turn around or after situations like repair. Conventional financing technique is used for your traditional rentals and long term hold scenarios. As the foreclosure market increases you will will find investors to use HML as a way to secure the property in a short period of time then refinance into Conventional finance.
Is It Safe to Use?
It is relatively easy to find HML that are merely businesses seeking a higher return on investment funds than they can get in the stock market. These lenders typically follow the regulations and laws as carefully as institutional lenders in underwriting, documentation and servicing of their loans.
Loan modifications may be easier and more creative with a hard-money lender because borrowers often can speak directly to the top decision maker. In addition, because every loan is a larger percentage of a hard-money lender’s portfolio than it is for an institutional lender, the hard-money lender has more incentive to help guide each loan to a successful conclusion.
What About the Interest Rates?
The interest rate depends upon the Lender. The rate will range from 10% interest only to 18% interest only annual interest rate payable monthly in most cases. Some Lenders will defer interest payments to payoff, benefiting investors that do not want payments during rehab.
Getting Hard Money in California
Lending Hard money in California is just as popular as it is in most other areas, particularly with property buyers. You might wonder why credit seekers would likely decide on private hard money lenders over traditional loan associations. You may often hear or read that private funders demand extra or that they are known to be a last option for funding.
The truth is that they offer many services that the banks cannot or will not. They approve more loans, in a timelier manner. They understand the needs of the investor, since most of them have invested in real estate. Many of them still do. Some of them are even considered specialists, a good choice for the rehabber or reseller. The fees that they charge are reasonable, for the most part, but to get the best deal, you should shop around.