If you're the owner of property if it is single family home, apartment, house building or a commercial property, in this economy, chances are you already know about Hard Cash Loan.
Fundamentally a hard money or a private cash loan is a sub-prime loan. A lender puts more focus on the security instead of your revenue and credit. When you go to a pawn shop to pawn an item, the store owner does not mind what you do for living, how much you make, and what your credit history is like. He only cares for the value of that time and that too a firesale value.
Similarly, a personal bank, looks more at the value of your real property and how much equity you have in it. If the property is worth 1,000,000 dollars and you owe $300,000. You can borrow $200,000 to $300,000 more on it easily. The formula lenders use is called loan to worth proportion. In most cases it is easy to get a loan up to 60% loan to worth proportion.
Qualifying for this kind of loan is less draconian as compared to a typical loan especially when it's a non-owner occupied or a commercial property. Debt proportions are liberal and credit report has small consideration. If you had great debt ratios and good credit score why will you be making an application for a hard money loan? Hence if your hard money lender is asking you for your credit score, you need to call somebody else.
The Pros are it is fast. Mostly it is possible to get funds as fast as five working days. Qualifying, as discussed above, is far easier. Without hard cash loans lot more people will lose their properties. Hard cash or personal money loans fulfill a vital need in the society. It is a bridge loan and could be a great relief. It is also called a band-aid loan.
The Cons are it is short term. Often not more than seven years. Mostly it is from one to three years. It is interest only. IR is high, from 10 to 12%. Fees are high. Expect to pay three to 6 points.
Not everybody who gets a loan like this has credit or revenue problem. In this economy, more people who are licensed money lender have good credit and good income but somehow cannot get a bank or a conventioanl loan for one reason or the other. Banks are taking months to close a loan.
Money for funding these loans comes from private backers; from retirement; hedge funds and Trust Deed Backers.
Fundamentally a hard money or a private cash loan is a sub-prime loan. A lender puts more focus on the security instead of your revenue and credit. When you go to a pawn shop to pawn an item, the store owner does not mind what you do for living, how much you make, and what your credit history is like. He only cares for the value of that time and that too a firesale value.
Similarly, a personal bank, looks more at the value of your real property and how much equity you have in it. If the property is worth 1,000,000 dollars and you owe $300,000. You can borrow $200,000 to $300,000 more on it easily. The formula lenders use is called loan to worth proportion. In most cases it is easy to get a loan up to 60% loan to worth proportion.
Qualifying for this kind of loan is less draconian as compared to a typical loan especially when it's a non-owner occupied or a commercial property. Debt proportions are liberal and credit report has small consideration. If you had great debt ratios and good credit score why will you be making an application for a hard money loan? Hence if your hard money lender is asking you for your credit score, you need to call somebody else.
The Pros are it is fast. Mostly it is possible to get funds as fast as five working days. Qualifying, as discussed above, is far easier. Without hard cash loans lot more people will lose their properties. Hard cash or personal money loans fulfill a vital need in the society. It is a bridge loan and could be a great relief. It is also called a band-aid loan.
The Cons are it is short term. Often not more than seven years. Mostly it is from one to three years. It is interest only. IR is high, from 10 to 12%. Fees are high. Expect to pay three to 6 points.
Not everybody who gets a loan like this has credit or revenue problem. In this economy, more people who are licensed money lender have good credit and good income but somehow cannot get a bank or a conventioanl loan for one reason or the other. Banks are taking months to close a loan.
Money for funding these loans comes from private backers; from retirement; hedge funds and Trust Deed Backers.
About the Author:
Yanni Raz is a mentor for lots in the Estate Mortgage industry, Yanni Raz is been schooling many homeowners in California about business loan and help some also to save their homes through loans with bad credit
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