Private Money Loans for Real Estate purchases or refinances (also known as Hard Money Loans) are becoming more popular these days. Ever since lending institutions tightened their loan requirements, frustrated Brokers, Realtors and their buyers and investors have been seeking a viable and reliable source for their real property buying and investing. Getting approved with a traditional lender does not only require extensive evidence of credit standings, verification of income, good debt to income ratio and a lot of paperwork but it can also be a painfully slow process – even with great credit scores and solid income. This is where Hard Money/Private money comes in.
A hard money loan is simply a short-term loan secured by real property and funded by a private investor(s). The terms are generally 12 months, but they can be extended. Monthly payments are usually interest only with a balloon payment at the end of the term. The intent is that within the term of the loan, the borrower corrects the issues that prohibited them from obtaining a conventional loan. If that goal is not achieved, the hard money loan may be extended or refinanced into another such loan.
Because hard money lenders are primarily concerned with the property’s value rather than the borrowers’ credit, FICO scores do not present a problem. Borrowers with damaged credit, even foreclosures and bankruptcies can still qualify for a hard money loan if there is enough equity in the property or they have at least 25% down payment for a purchase.
The reasons other Brokers and Realtors seek out a hard money loan usually fall into one or more of these categories:
Almost any property type, including single family, multi-family, commercial and some land may be a candidate for a hard money loan. Sun Pacific Mortgage is one of the few California hard money lenders who still lend on owner-occupied properties. We continually study the ever-changing regulations involved in this type of loan and feel competent in supporting them.
We look forward to addressing any questions you might have on the usefulness of a hard money loan and to discuss our many available lending programs. Feel free to call us at 707-523-2099 or email us through our website contact form below.
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California Real Estate financing only. Minimum loan amount starts at $175,000.