Thursday, 20 November 2014

5 Real Estate Predictions for 2015

According to Freddie Mac’s US Economics and Housing Market Outlook for the month of
Predictions 2015
Real estate Predictions
November, home purchase market will strengthen along with economy in 2015. Freddie Mac's chief economist says “The good news for 2015 is that the U.S. economy appears well-poised to sustain about a 3 percent growth rate in 2015 — only the second year in the past decade with growth at that pace or better”. Governmental fiscal drag has turned into fiscal stimulus; lower energy costs support consumer spending and business investment; further easing of credit conditions for business and real estate lending support commerce and development; and consumers are more upbeat and businesses are more confident, all of which portend faster economic growth in 2015. And with that, the economy will produce more and better-paying jobs, providing the financial wherewithal to support household formations and housing activity.
Freddie Mac economists have made the following projections in housing for the New Year:

Mortgage rates

 Interest rates are predicted be on the rise next year. In recent weeks, the 30-year fixed-rate mortgage has dropped below 4 percent. But by next year, Freddie projects mortgage rates to average 4.6 percent and inch up to 5 percent by the end of the year 2014.

Home prices

By the time 2014 ends, home appreciation will likely have slowed to 4.5 percent this year from 9.3 percent by last year. Appreciation is expected to drop further to an average of 3 percent in 2015. "Continued house-price appreciation and rising mortgage rates will dampen affordability for home buyers," according to Freddie economists. "Historically speaking, that is moving from 'very high' levels of affordability to simply 'high' levels of affordability."

Multi-family mortgage originations

Mortgage originating from the multi-family sector have surged about to 60 percent between 2011 and 2014. This Increase is expected to continue in year 2015, and projected to rise about 14 percent.

Housing starts

Home building is expected to increase in 2015; it is projected to rise by 20 percent from this year. That will help total home sales to climb up to 5 percent, reaching the best sales pace in eight years.

Single-family originations

Mortgage originations of single-family homes will drop by an additional 8 percent, which can be attributed to a steep drop in refinancing volume. Refinancing is expected to make up 23 percent of originations in 2015; they had been making up more than half in recent years.

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Friday, 14 November 2014

What Will Hard Money Loans Cost You

California hard money lenders
Los Angeles hard money lenders
If you are new to private money financing or most commonly hard money loans, this article will clarify what private funded equity based lenders is all about. The term has been changed a little bit. Today Los Angeles Hard Money Lenders don’t need to be expensive if there is a right combination of factors.
What hard money (equity base lending) means? And what is hard money loans meant for? Following are some answers to the question.
1. For borrowers hard money loans are intended for more down payments (equity) in the property than traditional lenders and banks acquire.
2. Hard money loans are intended for short term as a substitute for long term bank loans.
3. LosAngeles Hard Money Loans don’t require recent history of credit, limited credit, late payments, judgments and foreclosure.
4. They are popular among foreign national (non US citizenship).
5. Borrowers who are in need of financing during a probate proceedings.
6. Because of lack of employment duration, career shifts, and employment gaps which normally banks don’t allow.
7. You are in need for construction or renovation funds for property investment because banks don’t offer construction loans now days.
8. You have owned 4 to 10 concurrent properties.

Interest Rates

Interest rates vary from 7 to 12% depending on variety of factors like low LTV (loan to value ratio), which is primary determination factor. If you are borrowing only 20% of the property, you will pay less for loan as compared to someone who is borrowing 70% value of property.


There are private lenders that still making loans today without caring about credit scores or previous credit history while making a loan. The new generation hard money lenders offers pricing discounts for borrowers with a better credit scores and elapsed time from prior derogatory events such as bankruptcy, foreclosure, short sale etc. Judgments, unpaid taxes, and delinquent court ordered payments must be paid with new loan or prepaid in cash before funding.

Points and fees

Fee to the lenders and broker arranging the loans are involved in lending hard money loans. Points charged for hard money varies but there is no such thing as “no point’s hard money loans”. Other fees payable are to title escrow recorder, title insurer, and third parties which vary by vendors.

Loan to Value

You will have to pay 25 to 50% down payment plus points and lenders fees if you are purchasing property. This amount will also vary depending on the lenders and other factors like property type, location, prior credit history, accompany etc. Hard money loans are predicted on protective equity in the property at closing, therefore there are no low down payments hard money loans.

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Friday, 7 November 2014

Finding Hard Money Loans For Real Estate

Hard money lenders provide financial resource for owners who are looking for non-traditional loans. Qualifying for hard money loan are much relaxed than getting it from bank, as hard money lenders lenient on personal credits. Banks charge interest rates and fees that could make borrowers tremble and base lending decisions on whether it will be enough equity in their subject homes that foreclose and still could turn a profit. The good thing is you may qualify for hard money loan with bad credit or a pending income that is difficult to prove.
Sacramento Hard Money Loans are used by many investors as a short term solution to fund real estate property. It can be used to fund fix and flips until long-term financing can be put down in place. It is usually expensive than traditional financing and banks. Hard money is a great option for many investors. The first thing you notice with hard money lenders is that; they charge higher than conventional lenders. Most of them are charging about 14 to 16 percent points for their money. Points are the percentage of total loan and could add costs quickly when they are charging 2 to 4 percent on loan.
California Hard Money Lenders

Why investors would use hard money

The first reason is they may loan the entire amount of money you will need to complete a deal. Hard money lenders base the amount of the loan on the after repaired value of AVR. They will loan 65 to 70 percent of you AVR, which is not the purchase price, this is how the property will be worth of, once you fix it up.

How is the deal structured?

Let’s take an example. You buy a home of worth $60,000 having AVR $130,000 and lender goes up to 70 percent on the property. The lenders need bids and estimates for repairs and they will pay out the money for repairs like construction loan. They pay 25 percent for repairs needed at closing and the other payment comes under 25 percent increments as the repairs are completed. They won’t charge interest or the points. Some hard money lenders charge 15 percent interest and 4 points, but will reduce the points paid after you have done few deals with them.

Cost will add up very quickly to this deal very quickly. The interest will cost you around $6,825 and the points $3,640 if you use hard money for over 6 months.

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Sunday, 2 November 2014

How Hard Money Loan Works

Hard money lenders are private individuals or small firm that lend money based on the property that an individual is buying and it is not your credit score. These loans will cost you more than an average loan. Developers among other will use it to fund deals as you can borrow up to 100% of your purchase price. On the other, hand hard money lenders will suggest you to back up your loan with the real assets. If you know you can buy a property and turn it quickly at huge profit, and you cannot get a standard mortgage. It would be one way; most of the investors use hard money to get into the property having some quick fixes to raise their property value.

Sacramento Hard Money Loans are more easily accessed. If you can develop a good relationship with local hard money lenders, with no appraisal cost you will get funded within a couple of days. Many hard money lenders have their different requirements and operating procedures. The local lenders that only charges 12% rate of interest and only one point of organization if you keep it less than a year. He has over 1100 notes, so he doesn’t want the hassle, if he wants his money to stay loaned out.

The typical hard money lender will charge somewhere around the usury rate. In Texas its rate is around 18% per year, most of the hard money lenders will charge you about 5% origination rate and 13% interest rate on a year note or no points upfront with 18% rate of interest with a shorter call. Now they can get around usury by shifting their origination fee into the commitment fee.
The good thing about hard money lender is that the loan is normally not based on credit score (like local lenders) or at least not on your credit worthiness (i.e. assets and income), now you can receive funding within a matter of days (normally about 7-14 days) rather than over a month, and you can get a loan on any piece of junk that you find. You also are not normally dealing with a processing team. You deal directly with an individual lender. If he or she says yes, then you have the loan. This is an advantage over, going through an entire process of loan committee or underwriting process.

On longer term investment hard money is not a good option but in short terms purchases they can be a very strong tool. 

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