Creative Financing for the 21st Century
Alternative Methods for Funding Purchase and Refinancing
Buyers and Borrowers are looking for an alternative way to buy or refinance. The banks just can’t help!
We have been in this business in Santa Rosa for over 26 years. We have been through the good times and the bad. We are SURVIVORS. Right now the market is in recovery, but borrowers are still consistently turned down by the banks.
The Wall Street Journal printed an article about hard money investors showing that private lenders fill an important void. For borrowers who have been turned away by banks, hard-money can provide a chance to take advantage of opportunities in the market. Ever since mortgage defaults surged after the housing crash, banks have been reluctant to lend to certain types of borrowers, including investors.
Examples: Robert and Yvonne Fassett praise the hard-money business. They secured a loan to restructure their finances after a kitchen-cabinet distribution business they owned for 30
years suffered in the downturn, ruining their credit. The couple received a one-year, $120,000 loan with a 12% interest rate.
“The fees and interest rate were no doubt higher than a bank, but it was well worth it since no bank was willing to listen,” says Mr. Fassett, 59.
So how does it work?
Through mortgage brokers, hard-money lenders offer high-interest, short-short term loans to borrowers who can’t get traditional bank financing, including investors and people with spotty credit. The interest rate can be in the teens – compared with less than 5% for bank mortgages – while the length can be as short as 12 months.
Hard-money lenders don’t focus much on a borrower’s credit scores. They care more about asset valuations and loan-to-value ratios. Many lenders won’t lend more than 50% to 70% of the home’s value, while banks will lend as much as 80% and government-backed loans can go as high as 97%.
Because there is little bureaucracy when compared with big banks, deals can be approved and closed within just a few days.
Give us a call to discuss your loan scenario.