Everybody is pretty much aware that the economy has changed and the way a lot of things have been done has changed. Banks no longer lend like they did before the economic recession struck, and they take even longer to reach a decision than they did before. However, there are still ways to locate funds to complete investment type deals by using hard money lending sources.
People who are very interested in providing money to support these types of transactions have been around for a very long time. They like to help in the purchasing of certain properties that are deemed risky by traditional sources. This is either because of the property itself or the credit history of the person seeking funds.
Another reason a person may seek the assistance of a hard money lender is that the deal must take place quickly or it will not happen at all. This occurs during short sales, where the land or building is selling much lower than it normally would, because the land became over valued and the mortgage is much high than the land is worth.
There are people who look for opportunities to help people purchase the property for the one willing to buy it, and they will supply enough funding to help make the transaction occur. Although, there are some limitations as to how much help they are willing to provide. They also do not want to wait a long time before they are paid back.
An example of something that they would be willing to underwrite is a property selling below value, but needs to be renovated to bring it up usable standards. The group lending the buyer money will ascertain what the true value of the property is and set a figure on what they will let the person borrow. If they can not reach an amicable agreement on the perceived value, then they will walk away and not lend any money at all.
One of the differences between these lending groups and the banks is the cost of borrowing the money. They are not looking to lend the money for more than six years in most cases, and the interest rate they charge can be in the neighborhood of 10 to 15 percent. This actually works in the one seeking the funds favor as it acts as an incentive to try to find a traditional mortgage once the property is fixed up.
These lenders do not care about the credit worthiness of the borrower, because they will only supply funds to cover 60 to 70 percent of the loan to value equation and if the borrower defaults they will take ownership of the property. The loan to value works like this: if the properties listed value is $200,000 and the investors only supply 70 percent, that will come out to $140,000. The person borrowing the money will have to get the rest through other means. They often feel comfortable that they will not lose money since there is a buffer against that loss.
The economy has changed greatly, but there are still people looking to make things happen in real estate. Hard money lenders will help if the situation is a good one.
People who are very interested in providing money to support these types of transactions have been around for a very long time. They like to help in the purchasing of certain properties that are deemed risky by traditional sources. This is either because of the property itself or the credit history of the person seeking funds.
Another reason a person may seek the assistance of a hard money lender is that the deal must take place quickly or it will not happen at all. This occurs during short sales, where the land or building is selling much lower than it normally would, because the land became over valued and the mortgage is much high than the land is worth.
There are people who look for opportunities to help people purchase the property for the one willing to buy it, and they will supply enough funding to help make the transaction occur. Although, there are some limitations as to how much help they are willing to provide. They also do not want to wait a long time before they are paid back.
An example of something that they would be willing to underwrite is a property selling below value, but needs to be renovated to bring it up usable standards. The group lending the buyer money will ascertain what the true value of the property is and set a figure on what they will let the person borrow. If they can not reach an amicable agreement on the perceived value, then they will walk away and not lend any money at all.
One of the differences between these lending groups and the banks is the cost of borrowing the money. They are not looking to lend the money for more than six years in most cases, and the interest rate they charge can be in the neighborhood of 10 to 15 percent. This actually works in the one seeking the funds favor as it acts as an incentive to try to find a traditional mortgage once the property is fixed up.
These lenders do not care about the credit worthiness of the borrower, because they will only supply funds to cover 60 to 70 percent of the loan to value equation and if the borrower defaults they will take ownership of the property. The loan to value works like this: if the properties listed value is $200,000 and the investors only supply 70 percent, that will come out to $140,000. The person borrowing the money will have to get the rest through other means. They often feel comfortable that they will not lose money since there is a buffer against that loss.
The economy has changed greatly, but there are still people looking to make things happen in real estate. Hard money lenders will help if the situation is a good one.
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