Hard Money Lenders
This post is a little off topic, but with everything going on in the real estate world, it is important to have the information. We are going through a tough financial bubble, and because of reforms to lending practices home owners are feeling the brunt of this financial burden because they no longer qualify for new loans, either because of lower property values or tighter lending guidelines.
Not long ago property owners counted on their home equity to bail them out of any financial problem. Because of the current situation, properties have lost tremendous value and there might not be enough equity to refinance a loan. For so many years people were taking cash out of their homes to buy cars, vacations, and more. No longer can the average American use their home as a bank account. Due to this, many Americans are turning to credit cards to maintain their lifestyle.
But the solution to a difficult financial situation is not to run up credit cards because their interest rate can go as high as 30% (compounded daily) and they will just add to the problem. Hard money loans, on the other hand, are better financial instruments which provide more affordable interest rates and terms that can help a property owner sail through this economic recession. Many people don’t really know their options when it comes to hard money, but the guidelines are really straight forward.
Hard money loans can go as high as 80% of the value of the property, although these days many lenders are trying to keep this ratio below 65%. Hard money loans are available on any type of property, including commercial properties, land, investment properties, apartment buildings, gas stations, even churches. Hard money loans can also be made on an owner occupied property. These types of loans can be amortized over a period of 30 years, and sometimes can be short term bridge loans with interest only payments. Even with hard money, however, it is important to be able to show the ability to repay the loan. The advantage with hard money these days is the flexibility in the underwriting. Many times you are able to speak directly with the decision maker, and put together a package that makes sense, rather than dealing with a large institution who wants you to fit into a particular box that is becoming increasingly small.
Because of the banking crisis more and more home owners are losing their properties to foreclosure, the sad part is that many of those foreclosures can be stopped or avoided with action on the part of the homeowner. In California alone foreclosures have been up over 200%, this figure is based on market analysis performed in July of 2008 by housing authorities. Hard money lenders often times provide the only real option for homeowners who no longer qualify for institutional loans with the current credit crunch. If you have been looking for a loan and have been turned down by the banks, now might be the time to look into your hard money options.
