At first, hard money lenders may seem difficult to locate. However, you just need to know the right places to look. Professionals such as accountants, attorneys, and insurance agents have often have clients who are hard money lenders or more generically, private lenders. Especially, if they think they could profit by your endeavors, these professionals often will be eager to refer a source.
Settlement attorneys are often very knowledgeable of individuals in the field since they write loan documents for hard money lenders. Because of their familiarity with the work, attorneys may be hard money lenders themselves.
Since accountants have clients seeking to invest, they are another great source. Real estate is a very secure investment and lenders are not timid to real estate loans, especially when the long term value is low and the interest rate is high. Usually trust in accountants is very high as people let them do their finances. Therefore, a referral from an accountant should carry a lot of weight for a lender.
Another method for uncovering lenders is to research the homes undergoing renovation. The courthouse can provide information regarding the lender involved in the renovation projects and often a private lender is involved. Concentrate on contacting lenders who have homes in the same area where you want to invest as their background and familiarity with the market makes them a more likely source.
Insurance agents will also be knowledgeable of the names of hard money lenders in your region. Any hazard insurance policies issued will have listed a "loss payee" if a lender is involved. An agent can go through their records and find names of private lenders on policies they have written.
Mortgage brokers who regularly work with investors are a good source. There may be a fee associated with the referral, but if it means finding a source, it very well might be worth it. Finding a hard money lender is not difficult if you have connections, know the proper circles to look in, and ask around. Stick to people in your area. It may require persistence, but eventually you will find one. They do exist. It just might take a little ground work to uncover them.
If you are looking for a hard money lender or more information about the industry in general, contact the professionals who take a hard bite out of the hard money business at http://www.pitbullmortgageschool.com today.
Joseph Devine
Article Source: http://EzineArticles.com/?expert=Joseph_Devine
Tuesday, July 29, 2008
Monday, July 28, 2008
Hard Money Loans: Basics and Important Information
Hard money loans (HMLs) are a special type of loan backed by real estate collateral. Generally short-term loans with slightly higher interest rates, hard money loans are typically made by private individuals or companies not affiliated with larger banks. Though few people truly understand the hard money lending business from either a lender or a borrower's perspective, the market represents an important opportunity for investors and borrowers alike.
A borrower usually takes out an HML loan using real estate property as collateral. The hard money lender will provide the loan on a "loan-to-value," or LTV, basis. The "value" of a given property is defined in the business as the amount that a lender could reasonably expect to receive from the rapid liquidation of the real estate, should the borrower default and force a foreclosure. Generally, the HM lender will offer cash at a 65% to 70% LTV ratio - that is, up to 65-70% of the property's current value.
HMLs are often more expensive (that is, they carry a higher interest rate) than many other types of bank loans because lenders often accept more risk of default in making the loan. Despite the higher rate of interest, borrowers may find HMLs attractive for several reasons:
- They do not require the stringent standards imposed by banks
- They are less influenced by a poor credit score or rating
- They have less need for acceptable documentation
- They can be used as "bridge loans" until other financing can be obtained
- They are often faster than traditional loans
Many borrowers choose to take out HMLs because of the lower requirements to qualify. People who face imminent foreclosure or who need money immediately often find that hard money loans are the best - or only - option.
However, because hard money loans have substantially higher default rates than traditional loans (due to less restrictive credit requirements), lenders usually take the first lien on the collateralized property, in addition to attaching higher interest rates. This lien is a legal claim to the real estate which essentially gives the lender first right for compensation from the sale of the property if the borrower should default on the loan.
Regulation of the hard money lending business varies slightly from state to state, but laws are generally non-specific and fairly loose, with a few notable exceptions, where limits on interest rates are set low enough to discourage most hard money lenders from doing business.
For more information on hard money lending for mortgage brokers, visit the website of the Pitbull Mortgage School at http://www.pitbullmortgageschool.com.
Joseph Devine
Article Source: http://EzineArticles.com/?expert=Joseph_Devine
A borrower usually takes out an HML loan using real estate property as collateral. The hard money lender will provide the loan on a "loan-to-value," or LTV, basis. The "value" of a given property is defined in the business as the amount that a lender could reasonably expect to receive from the rapid liquidation of the real estate, should the borrower default and force a foreclosure. Generally, the HM lender will offer cash at a 65% to 70% LTV ratio - that is, up to 65-70% of the property's current value.
HMLs are often more expensive (that is, they carry a higher interest rate) than many other types of bank loans because lenders often accept more risk of default in making the loan. Despite the higher rate of interest, borrowers may find HMLs attractive for several reasons:
- They do not require the stringent standards imposed by banks
- They are less influenced by a poor credit score or rating
- They have less need for acceptable documentation
- They can be used as "bridge loans" until other financing can be obtained
- They are often faster than traditional loans
Many borrowers choose to take out HMLs because of the lower requirements to qualify. People who face imminent foreclosure or who need money immediately often find that hard money loans are the best - or only - option.
However, because hard money loans have substantially higher default rates than traditional loans (due to less restrictive credit requirements), lenders usually take the first lien on the collateralized property, in addition to attaching higher interest rates. This lien is a legal claim to the real estate which essentially gives the lender first right for compensation from the sale of the property if the borrower should default on the loan.
Regulation of the hard money lending business varies slightly from state to state, but laws are generally non-specific and fairly loose, with a few notable exceptions, where limits on interest rates are set low enough to discourage most hard money lenders from doing business.
For more information on hard money lending for mortgage brokers, visit the website of the Pitbull Mortgage School at http://www.pitbullmortgageschool.com.
Joseph Devine
Article Source: http://EzineArticles.com/?expert=Joseph_Devine
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