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Need To Know Basis – The Shrewd Realtor

Money Road Sign

As a real estate agent you need to know the products out there for the buyer.  I mean loan products.  Everyone and anyone could buy a home during the heyday!  Now there are really only a few loan programs:

  1. The government regulated (Fannie Mae/Freddie Mac, FHA, VA)
  2. The In-House loans (credit unions and local banks)
  3. Lastly “Hard Money”

The government regulated loans such as FHA are regulated – pretty heavily.  The banks and underwriters are worried they may approve a loan incorrectly and get pounced on by the regulators.  This is likely to relax in the coming months and years, though there are some shrewd enough to make such loans appear stronger in offers today.

More in-house loans are being done by credit unions and banks and can appear stronger in offers.  These are not regularly done by Fannie/Freddie or FHA or VA.  They are irregular loans such as lots of acreage, farms, etc.  Local knowledge is really needed for these types of loans.

Hard money is something that has come into its own.   There is little bureaucracy, deals can be approved and closed in just a few days, there’s no red tape as to qualifications and rates are improving with the hot real estate market.  Basically considered “all cash”, such loans are extra strong and can be used to purchase or refinance dump property, bad credit borrower, irregular income borrower, large cash out borrower, Bridge loans, etc.

As you have seen, the housing market values are only going up, but still the current prices are too good to miss out on…so realtors now, more than ever, need to be extra shrewd when helping Buyers’ submit strong offers and also match them with a really good Lender who is extra shrewd.

And to that I say, “Thank goodness for shrewd agents and lenders!”

Refinance Using Hard Money


Refinance Using Hard Money

You have loanable equity in your property, whether it’s residential, commercial or land, and want to borrow against it.  Loanable equity means the amount you can borrow that exceeds what you already owe not to exceed 70% of the value of the property.  For example: you owe $245,000 and the value is $350,000.  There is no “loanable equity” as you are at the 70% limit.  Another example:  You owe $100,000 and the home is worth $350,000.  70% of $350,000 is $245,000 so this would mean you have $145,000 of “loanable equity”.

So you need money and you’ve tried your favorite bank, your favorite savings and loan, your favorite credit union, your favorite mortgage broker and gone on line and applied on several sites for a loan.  It’s been no, no, no, no, no and no in that order.      

The reasons you cannot get a loan are the exact reasons you need Hard Money.  It allows really bad credit, high debt ratios, problem properties, short job history, etc., etc., etc.

Refinancing can allow you to reduce your credit card debt, finance some home remodeling, pay for college tuition and more.  The money you were paying out for those non-deductible expenses is now being applied to a tax deductible expense – your home mortgage!

You really only need 2 things for Hard Money: #1 is equity and #2 is an ability to repay the loan.

It is a real tragedy that the Feds have so changed the lending standards with burdensome regulation so that there are not more options for borrowers looking to get at the loanable equity in their homes.  Hard Money is still around and getting to be a popular choice as it is the only game in town for so many.

Deal of the Month, We Cannot Lie

LomHard Money Loan of the Month
By Ken Walker, Lead Loan Originator

Investment Property Purchase in Sea Ranch, California

Two weeks ago a borrower called needing a loan to buy a new Rental Property in Sea Ranch, California as part of a 1031 exchange.  Her current Lender was unable to perform with the speed that was needed to satisfy the 1031 exchange and the Seller’s needs.

The purchase price was $1,100,000 and she needed a loan amount of $745,000, making a loan-to-value of 67.7%.

This borrower called at 4:30pm on Thursday.  We got right to it and that same night got the loan approved with an interest rate of 8% for 5 years! The property was cross collateralized to another property she owns, giving a lower the loan to value, thus the better rate.

On Friday the loan was funded and Monday morning the loan recorded with the borrower’s keys in hand!

One of our favorite mottos is, “If we say it can be done, we’ll get it done!”  And another is, “We fund big loans, we cannot lie!”

Call our office at 707-523-2099 if you need some creative financing help for your real estate purchase or refinance.

Are You A Risky Borrower?

I have heard numerous stories from my past borrowers where they were told how acquiring a home loan would be an unending, agonizing and complicated process. And that on top of this, one minuscule credit problem was going to end their journey to getting their dream home.

This is not the case if you findRiskthe right Lender. Getting a loan for the home you desire can prove to be difficult if Lenders see you as a “high-risk” borrower.  So what is a high-risk borrower?

There are 4 circumstances covered in a recent Trulia blog “Are You A Risky Borrower? 4 Ways To Find Out” that are helpful in answering this question:

  1. Your credit score is below 620.
  2. Your employment history is unusual.
  3. You have financial responsibilities you aren’t taking care of.
  4. You don’t have a down payment.

If one or more of these applies to you, then you probably have some work to do before you can be approved for a traditional home mortgage. Not so with Hard Money.  The only item we cannot contend with is no down payment.  

If your favorite Lender or bank turns you down for a home loan, give us a call at (707) 523-2099.  We have helped many a high-risk borrower with our creative financing programs, known as hard money.  We would be happy to help!

For a more in-depth look at the above 4 points, see the original article here: http://www.trulia.com/blog/are-you-a-risky-borrower-4-ways-to-find-out/ .


My Own Hard Money Story

1I wanted to tell my personal story about Hard Money financing to help other families struggling with loan approvals.

My Husband and I could not get any local bank or credit union to approve our loan application to buy our first home.  I had not yet worked at my job for 2 years and my husband was self employed with difficult to prove income.  But, we had come upon the perfect home and had a good down payment so did not want to miss out!

Fortunately for us, my Husband’s Parents,  Lynn and Forest, own Sun Pacific Mortgage, a Hard Money lender.  Sun Pacific offered financing for  principal residence (owner occupied) purchases.  We did a loan application and he Pre-Approved us on the spot!  YAY!

Within 2 days Forest had our home loan approved by one of his many private investors.  He also said he would get us connected with a good, local conventional lender to help us refinance as soon as we could, for that lower home mortgage rate. How nice!  

After all was said and done, the Sellers accepted our offer over others with conventional financing because we could close fast and basically had a cash offer. We bought our first home with a 10.5% interest only loan.  Before your mouth drops open as much as mine did at first, listen to what this really meant:

This “high cost mortgage” really was only $200 more a month than I was already paying for my small apartment.  That apartment had no yard, I couldn’t do what I wanted to it and I had to put up with living above noisy neighbors.

2Just $200 more a month gave me a bigger home, I could paint and decorate however I wanted, I could privately enjoy backyard fun with my kids and I started benefitting from the tax right-offs of homeownership!  

It really is a just a math problem:  Can you afford the new monthly payment?  I already knew it was worth it, even if it did cost a bit more per month.   If it’s worth it and benefits your family then DO IT.  Especially since you could qualify later on and get a lower interest rate upon refinancing…but if you don’t act fast, you could miss out on the deal you wanted.

This is my Hard Money loan story and why I have the passion I do when working at this Company now, helping others with similar circumstances. It’s always a happy ending!

What are Hard Money Loans and How Do They Work?


If you’re not familiar with Hard Money Loans, you may be asking yourself what they are, and what makes them different from traditional loans? If you have had trouble getting a loan through your bank or other traditional lending options due to bad credit, a past bankruptcy, or other troubles, it may be time to start looking for alternative finance solutions.

This is where Hard Money comes in.

At Sun Pacific Mortgage & Real Estate, we are experts at providing Hard Money Loan solutions. It’s what we do best! We have been providing them since 1988 in Sonoma County and can lend throughout all of California, dedicated to delivering a straightforward and complete loan process to get you financed quickly.

Let’s take a look at some of the details:

Private Mortgage Brokers/Private Lenders

Banks are usually not interested in providing a mortgage to a bad credit household due to what they perceive as potential risk. Hard Money Lenders are more interested in who you are and how you make your living, and less concerned with bad credit. They are not tied to the traditional bank process and can look at your situation on a personal level.
Simply stated, Private Lenders are people looking to make a deal, just like you! They want to lend you funds for that property you want, in exchange for repayment of the loan with interest.

Still sounds a lot like a bank loan doesn’t it?

Well it is, but Lenders will look at the whole picture, not just what’s on paper!

What is Loan-to-Value (LTV)?

When it comes down to lending on a property purchase, the amount you can receive is based purely on the value of the property. This is what we call the Loan-to-value (LTV) ratio. LTVs are an important aspect of Hard Money lending. Most of the time, Private Lenders will offer 65-75% of the value of a property, requiring you to come up with the remaining 25-35% before applying.

Sounds a lot like a down payment with traditional lending doesn’t it? Right again! This helps secure the loan and provides a good faith investment along with your promise of repayment.

Loan Options and Property Types

Hard Money Loans are beneficial to property investors looking to make profits on purchases, rentals, home flips, business purposes, and sometimes construction. It is also beneficial to individuals looking to purchase their first home, a move-up home, refinance for debt consolidation or to pull extra cash out for home improvements.

Private Lenders like to see your plan to make a profit with the loan, either in rising property values, rehabilitation or acquiring extra income from renters. If you are looking to purchase a home to live in, Lenders will want to know your “exit strategy”, or how you plan to refinance or repay the loan in the future.

A good plan can be just as good as a great credit score in the eyes of Private Lenders!

Requirements for Borrowers

So let’s say you have a property picked out, 25% of the purchase price to invest and a good plan and repayment strategy… now what?

The rest is going to come down to your income, current finances, and providing proof that you can repay the loan. Typical loan amounts start at $100,000 on property purchases, and go up through jumbo size loans ($400K – $1 million and up from there). You can qualify for this loan even with a poor or bad FICO, a recent bankruptcy, foreclosure or short sale, the above are the requirements looked at by a Private Lender.

The length of a hard money loan can be short term, 12-24 months or 3-5 year and longer such as 15 or 30 year terms. Are things starting to make sense? We hope so!

Call Sun Pacific Mortgage & Real Estate today (707) 523-2099. We’ll get you started with a free consultation so we can get to know you and you can get to know how we can help you!

Get a Home Loan even with Bad Credit

Every day people are turned down by their favorite banks, and lenders due to bad credit or other circumstances. These are often hard working individuals with good income, enough savings for a down payment, and a desire to own a home. Unfortunatley for these people, banks usually don’t look any closer than your credit score before they turn you down.

There are other options out there.

Improve your Credit

This one is obvious! The first thing the big banks will usually tell you is to fix your credit and come back to them once you have. There are plenty of companies and services out there who will help you plan financially to target your credit problem areas and fix where things went wrong. Unfortunatley this can take a year, two years, maybe more.

Careful planning and the right spending habits can get you back on top of your credit game, but it may be too late if you had a specific property in mind.

So what are your alternatives? Let’s take a look.

FHA Loans

The Federal Housing Administration (FHA) is specifically designed to help low-income individuals and households get a home loan. These loans are great, for those who qualify, but if your income is too great, you may not even have a chance to apply. Your best bet is to find and contact an FHA lender and start the process.

So what if you don’t fit the FHA requirements for low-income household?

Your next and only option is simple.

Hard Money or Private Money Loans

Pic 5Hard Money and Private Money are interchangeable and have also come to be known as alternative financing or creative financing. Such loans are funded by individuals looking to fill a gap in the market place. They are private investors who want to help borrowers get that home or investment property they want, without having to wait for their credit to improve. Typically they need only see steady income and a good down payment to approve.

The rates for Hard Money and Private Money loans are generally higher than conventional mortgages and even subprime mortgages, in order to compensate for carrying greater risk. Hard Money and Private Money real estate finance program qualifications also will not turn you away for a bankruptcy, difficult-to-prove income or bad credit.

Short Term Financing

Hard Money and Private Money loans are often set-up with an “exit strategy,” so the Borrower can plan to refinance down the road and receive a better rate after solving any credit issues. These types of loans are often designed for shorter term financing, such as for real estate investors looking to buy property to remodel and rent for extra income or for individual homeowners looking to consolidate debts and bills by refinancing.

At Sun Pacific Mortgage we aim to help any Home Buyer or Home Owner who is looking for more options than the subprime lenders, traditional banks and FHA lenders have to offer. We work directly with the Borrower and Investor to find a loan strategy that works for you!

If you are interested in refinancing or buying property in any of the beautiful counties of California: Sonoma County, Napa, Marin, San Francisco, etc. then give us a call at (707) 523-2099 for a free consultation and let us help you get that home or investment property you’ve been hoping for.

Local & Creative Financing For Real Estate

“I am truly in awe of you your company! Yet again another seemingly seamless (I know you are working hard to make it seamless) process thanks to the systems that you have in place! Always a pleasure!”

“I commend you on another transaction and I will continue to refer you guys as I have on several occasions this past year! Much appreciation to you and your team! All the best, S.M.”

Hard Money Provides …

  • A Quick Close
  • Multiple Options
  • Shorter term loan
  • Makes an impossible deal possible

See some recently funded loans below, to get a better idea of how we can help you, your clients, your family and friends!

Call Us today at (707) 523-2099.

Ken and Forest, The Guys in the White Hats

P.S. We love Referrals!

Recently Funded:

Santa Rosa, CA (Sonoma County)

Loan Type: Refinance Owner Occupied 2nd
Amount: $150,000
Days to fund: 23 days
Reason for Hard Money: Debt consolidation

Sonoma, CA (Sonoma County)

Loan Type: Owner Occupied Business Purchase
Amount: $200,000
Days to fund: 9 days!
Reason for Hard Money: Credit was poor

Sebastopol, CA (Sonoma County)

Loan Type: Owner Occupied Purchase Bridge Loan
Amount: $562,000
Days to fund: 10 days!
Reason for Hard Money: Still had foreclosure reported on credit

Windsor, CA (Sonoma County)

Loan Type: Owner Occupied Hybrid – 15 year loan with 3 years interest only and then amortized for 12 years
Amount: $440,000
Days to fund: 15 days
Reason for Hard Money: Difficult to prove income

Mill Valley, CA (Marin County)

Loan Type: Investment Property Refinance
Amount: $240,000
Days to fund: 8 days!
Reason for Hard Money: Property needed fix-up

Elk Grove, CA (Sacramento County)

Loan Type: Owner Occupied Refinance
Amount: $260,000
Days to fund: 20 days
Reason for Hard Money: Low credit scores

Click this link for our rate sheet, showing the programs we offer.

NOTE: Get our financing despite bad credit, difficult to prove income, property a fixer, etc! We finance Jumbo loans, Bridge and short term loans, Owner Occupied purchases and refinances, investment purchases , commercial and land.

CALL TODAY, The Guys In The White Hats at
(707) 523-2099

California Housing Market Headed in Right Direction

In April, California Association of Realtors released their 1st quarter California Housing Market Update citing a number of interesting updates.

C.A.R. President Pat “Ziggy” Zicarelli was quoted as saying:

California’s housing market is moving in the right direction as we enter the spring home-buying season, but sales growth will likely be isolated in areas where inventory is more abundant and housing affordability is less of an issue.”

Taking a look at the the data C.A.R released, it’s interesting to note certain counties with sharp upticks in sales:

CountyApril Median Sold PriceMarch Median Sold PriceMTM% Change
Santa Barbara$596,770$729,17063.8%


Of the top 10 counties in California with MTM% changes, we can see a nice spread of housing sold in potential up and coming areas. With Tehama, Amador, Plumas, and Tuolumne Counties all located in Northern California, it would seem affordable housing under $300k is becoming more abundant and selling well. We can  also see  affluent areas like Napa, Santa Barbara, Ventura, and Alameda all maintaining solid home sales in areas with much larger home prices and a steadier inventory.


As a Hard Money Broker in Northern California for over 28 years, Sun Pacific Mortgage & Real Estate will always be there if you are looking for creative or alternative financing for real estate, anywhere in California.

We specialize in financing investment home purchases and refinances – single and multiple units. We are very much able to fund or refinance Bridge Loans, many owner occupied or principal residence purchases and some commercial purchases.

Give us a call at (707) 523-2099 if you are considering private financing with your next home purchase!

Owner Occupied Principal Residence – Part 1 of 2

Oo 1  This Will Be The First In A Series Of Articles That Will Explore The Varied Types Of Loans We Offer Investors. This will be the first in a series of articles that will explore the varied types of loans we offer Investors.

Let me start off by saying that I will always do loans to homeowners that are owner occupants. It is an important segment of lending and a heck of a niche for my office. It also has the most regulation by the state and feds who, in their infinite wisdom, have decided that this category of homeowner needs protection. Lots and lots of protection.

I will also tell you that there has not been a foreclosure of an owner occupied loan (that I am aware of) for the last 6 years. This is key.

These are generally very good loans. Most are just shy of getting 30 year fixed rate loans at or under 4% from what we call “A” paper lenders like Wells Fargo, Chase or B of A. Most are turned down due to something in their credit. Second most are turned down due to income. Problem property is the third reason. All the turned down loans that we write have down payments of between 20% and 60%.

Many mortgage brokers have backed off of this type of loan. My guess is they have been run off by the profusion and confusion of regulations. The tragedy is, they have run a lot of investors off of this type of loan. And really, it’s not that tough to know the regulations and comply. Yeah, there has been a lot of regulation, but my viewpoint is that you get your wits around all of it and simply comply with the fed and state mandates and you do these loans. So that’s what I do and that’s why I promote this type of loan.

Almost all of the owner occupied loans that we write have an “exit strategy”. We never used that term before the proliferation of fed and state regulations in response to the recession, but here it is. We write these loans as 15 years loans but I would wager none will go to that term. I looked at the statistics of the owner occupied loans we have written that are serviced and the ones that had paid off lasted an average of 11 months. So we make 15 year loans but they most likely will not last that long. And if they do, hallelujah!


One thing I must mention that I think increases the security of those loans, is the fact that the feds require they be impounded for the payment of property taxes and insurance. The feds did get that one right. You know every month that those items are paid and not accumulating.

The feds also require that the Borrower on an owner occupied loan demonstrates an “ability to repay” the loan. We don’t even write the loans if they cannot prove they can repay the loan. We turn down quite a few requests, even with a ton of equity, because they cannot prove their income.

Last item to mention is that the feds mandate these Borrowers do a consumer credit counseling class before the loan records. The counselor takes the disclosures for the loan and does a budget talk with the borrower. It’s done over the phone and takes about 45 minutes to an hour. This theoretically makes for a more informed Borrower. Makes sense to me.


So, statistically, owner occupied loans don’t get foreclosed upon, the loan to values are good, they have an ability to repay the loan, they have an exit strategy, they pay the property taxes and insurance monthly, they do a consumer credit counseling class and the properties will likely appreciate in the coming months and years.

That’s why these loans are a great investment.

To continue reading on to Part 2, click here!

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