Investment Property Loans

Defaulting On A Hard Money Loan

By on February 24, 2020   /   Investment Property Loans  
HArd Money Loans, COVID-19, Arizona

Residential Hard Money Lending

The source of hard money is private individuals who want high interest returns on their cash loans. Investors utilize these loans to purchase properties that banks do not normally offer loans on. The loans often carry interest rates in excess of twelve percent, however.

Loan Structure

The entire property is used by hard money lenders as collateral. Usually only sixty to seventy perent of the after rapair value of the property us covered by the hard money loan. The borrower would come up with the balance.

Terms

With interest rates ranging from twelve to eighteen percent, these loans are high interest but over fifteen to thirty years still have a baloon paument usually after the first or second year. At just 6 percent interest the montly payment over 30 years on a $100k loan is just $599.55 but trade that for a an interest rate of fifteen percent andit cleaps to $1,264,44. You can also expect  to pay between two and four points on the loan as well.

Default

Hard-money loan contracts typically contain a default interest rate clause that significantly raises the interest rate in case of default. For example, the rate may jump from 15 percent to 29 percent in some states, sending the monthly payment from $1,264.44 to $2,417.11, which could make it impossible for a small-business owner to cure the deficiency.

Foreclosure

Hard-money lenders are quick to foreclose when the borrower fails to cure the loan. Since the entire property was used as collateral, any portion of the loan amount that was paid back is forfeit. For example, if a business owner paid back $50,000 of a $65,000 loan, he lost the entire $50,000 paid.

Deed In Lieu

Hard-money lenders can offer a deed in lieu of foreclosure, which allows the borrower to give back the property and avoid foreclosure. The advantage is that no foreclosure appears on the business owner’s credit report or in the public records that would negatively affect her ability to get future loans. Business owners must be sure the lender will agree to sign a release of lien at the same time. Otherwise, the borrower remains responsible for paying back the loan even though the property was given back to the lender.

Source: https://smallbusiness.chron.com/happens-default-hardmoney-loan-61461.html

Phoenix Hard Money Real Estate Loans

If you’re interested in getting involved with real estate investing and need the capital to purchase properties hard money is a great way to get started.  Brad Loans has extensive experience in both real estate investing and hard money lending and is proud to offer Phoenix Valley real estate investors the financing they need.  It is easy to get started applying for hard money loan and Brad Loans is able to work with clients with bad credit and no credit. We are your source for hard money when traditional banks say no.  Read more about Brad Loan’s hard money loan programs or get started fill out our hard money loan application or give us a call to ask questions at 480-948-0880.

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Hard Money Loan Rates

By on January 13, 2020   /   hard money loans, Investment Property Loans  
Are Down Payments Needed

The average interest rate for a hard money loan is 11.25% with rates varying from 7.5% to 15% for the US in 2020. Hard money lenders also charge “points” and each point is the equivalent of one percent of the loan. These points help to cover the expenses of the loan and mitigate the risks the lender is undertaking. Points are normally paid upfront as opposed to interest that is paid back monthly.

Interest Rates And Points

Depending on the area of the country wherre you reside and from lender to lender, points charged and interest rates will differ. In many cases competition plays a large part in the rates offered. In a heavily populated area of the country where there are many hard money lenders – competition will drive interest rates and points charged to a lower total cost than in more rural areas where there is not so much competition. Obviously there is greater risk taken by hard money lenders when they lend money compared to hwne a bank does so – hence the interest rate will be higher than conventional bank loans. As well as interest rates in the ten to fifteen percent range, you can expect the points to be somewhere around three percent with variances from around two to ten percent, depending on the ratio of the loan to value.

Value Ratios

The Loan to Value (LTV) is decided by the ratio of the amount of the loan divided by the value of the property. Often hard money loan lenders will lend up to around seventy percent of the properties current value. Some hard money loan lenders will lend money based on the ARV or After Repair Value – that is to say the value after improvements to the property have been completed. However, this is a riskier loan proposition from the perspective of the hard money lender, because they are putting more money upfront and therefore will come at a higher interest rate. Some hard money lenders will even finance the rehab costs and lend a higher percentage of the ARV but as these loans are far more risky, you can expect far higher rates of interest in the region of fifteen to eighteen percent and five to six points when the lender is fundinga loan with little or no down payment from the person who is borrowingthe money. However, if the borrower can still make a profit at these interest rates, they may decide it is their best option.

Phoenix Hard Money Real Estate Loans

If you’re interested in getting involved with real estate investing and need the capital to purchase properties hard money is a great way to get started.  Brad Loans has extensive experience in both real estate investing and hard money lending and is proud to offer Phoenix Valley real estate investors the financing they need.  It is easy to get started applying for hard money loan and Brad Loans is able to work with clients with bad credit and no credit. We are your source for hard money when traditional banks say no.  Read more about Brad Loan’s hard money loan programs or get started fill out our hard money loan application or give us a call to ask questions at 480-948-0880.

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Hard Money Loan Versus All Cash Offers

By on January 8, 2020   /   Investment Property Loans  
HArd Money Loans, COVID-19, Arizona

Residential Hard Money Lending

Real estate investors, people with questionable credit and those needing a transitional bridge loan often use hard money loans for financing. Offered by investment groups, they need an equity investment greater than commercial loans but they are easier to obtain.

Offers

A seller faced with either an all-cash offer or one backed by hard money needs verification of funds from the all-cash buyer. This comes in the form of bank statements showing the money is currently in the bank, and has been for a period of time. A hard-money offer must be stated in the purchase contract’s financing section, and is accompanied by the lender’s preapproval letter. Both types of purchases usually give the seller a short closing window.

Financing

A hard-money loan is subject to a finance contingency, and an appraisal is done to verify that the property is worth the amount being borrowed. While a hard-money lender requires a substantial down payment, the lender still must verify the property’s existence and value. An all-cash offer has no appraisal attached, unless it’s at the request of the buyer, but the appraisal won’t affect the sale unless the buyer writes into the contract that the property must appraise at, or above the purchase price.

Costs

Hard-money loans are issued at rates above those of commercial loans. Their terms are anywhere from a few months to several years, but seldom are they for the long term. Fees are greater than those charged by commercial lenders. The most important borrowing criterion for a hard-money loan is the amount of equity the borrower is investing — hard-money lenders may require up to 35 percent down. Hard-money loans do not rely on the borrower’s credit standing for approval. Cash buyers do not face these conditions because they are using their own funds.

Source: https://homeguides.sfgate.com/hardmoney-loan-vs-cash-offer-81598.html

Phoenix Hard Money Real Estate Loans

If you’re interested in getting involved with real estate investing and need the capital to purchase properties hard money is a great way to get started.  Brad Loans has extensive experience in both real estate investing and hard money lending and is proud to offer Phoenix Valley real estate investors the financing they need.  It is easy to get started applying for hard money loan and Brad Loans is able to work with clients with bad credit and no credit. We are your source for hard money when traditional banks say no.  Read more about Brad Loan’s hard money loan programs or get started fill out our hard money loan application or give us a call to ask questions at 480-948-0880.

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