Private Money Hard Money Real Estate Investor Series – What Is A Hard Money Lender

by Roland on April 15, 2009

This is the second in a series of posts about Hard Money Lenders. In this post we will explore the question “what terms do hard money lenders lend on.”

What Terms Do Hard Money Lenders Lend On?

Obviously it varies from lender to lender. It used to be that hard money lenders would lend solely based upon the deal or property at hand. They would only lend up to a certain percentage of the fair market value of the property, that way in the event of default, the hard money lender would make a big profit if they had to foreclose or sell to an end buyer.

Today, you will find that many hard money lenders require more than just equity to qualify. This is because the laws now are favorable for consumers. Consumer protection laws, time consuming and expensive court procedures, and so on have forced some hard money lenders to become even harsher when applying for a loan.

It is good to know what the terms are when dealing with a hard money lender so you can find the one that will fit your needs. Here are some of the terms you can expect to see.

Typically they will only loan you up to 70% ARV (after repaired value). This means that a hard money lender can loan you up to 70% of what the home is worth in repaired condition.

So if you find a home worth $45,000 in the condition it’s in, and needs $20,000 in repair work, and after it is repaired the current fair market value is worth $100,000, then typically they can lend you up to $70,000, which would cover the cost of the house and the repairs.

Other terms you can expect are high interest rates. Interest rates vary from 12% – 20% annually and terms can last for 6 months to a few years. Many times these rates vary depending on your credit score and experience.

In most cases, there will be closing costs or fees to use hard money. Typically hard money lenders will charge anywhere from 2-10 points just to use their money.

One point equals one percent of the mortgage amount. So charging 1 point on a $100,000 loan would be $1000. These are all important things to consider when choosing a hard money lender.

Other things to consider are how quickly funds will be available. Many times, when you find investment properties, you need to move quickly. Your ability to get access to money quickly can make all the difference.

It’s important to begin relationships with potential hard money lenders as quickly as possible. You also need to be aware of pre-payment penalties. Pre-payment penalties can really hurt your deal and cut into your profits substantially. Try to avoid pre-payment penalties.

Here are a few more hard money lender contacts for you to work with!

All California Home Loans
HML Loan Type    Residential and Commercial
Lending Area    CA
Contact    Chris Goulart
Address    655 English Oak Court
City, State, Zip    Brentwood, California, 94513
Toll Free    877-462-3422
Web Site    www.aboutcaliforniahomeloans.com/private-money.html
Email    cgoulart@aboutcaliforniahomeloans.com

Atlanta Private Lending, LLC
HML Loan Type    Residential and Commercial
Lending Area    GA
Contact    James Melton
Address    1303 Hightower Trail , Suite 101
City, State, Zip    Sandy Springs, Georgia, 30350
Phone    770-354-1899
Fax    770-809-5060
Web Site    www.atlantaprivatelending.com
Email    reiclub@atlantaprivatelending.com

Blazevic Funding Group
HML Loan Type    Residential and Commercial
Lending Area    Nationwide Except AK & HI
Contact    Steve Blazevic
Address    16224 N. 38th Street
City, State, Zip    Phoenix, Arizona, 85032
Phone    480-248-3868
Fax    602-445-9919
Web Site    www.BlazeVicFunding.com
Email    stjepan@cox.net

BlueWater Funding, LLC
HML Loan Type    Commercial
Lending Area    DC, DE, MD, NC, NJ, NY, PA, VA, W.VA,
Contact    Neil Siman
Address    4925 St. Elmo Avenue
City, State, Zip    Bethesda, Maryland, 20814
Toll Free    866-551-2583
Phone    301-656-6566
Fax    240-766-0609
Web Site    www.bluewaterfundingllc.com
Email    info@bluewaterfundingllc.com

Brookview Financial, Inc.
HML Loan Type    Residential
Lending Area    AL, CA, CO, CT, DC,DE, FL, GA, IL, IN, KY, LA,MA, MD,ME,MI, MN, MO, MS, NH, NJ, NC, NM, NY, OH, OK, PA, RI, SC, TN, TX, UT, VA,WA, WI
Contact    Steve Petriella
Address    2321 Whitney Avenue
City, State, Zip    Hamden, Connecticut, 06518
Toll Free    877-734-2211 ext. 350
Phone    203-230-8500
Fax    203-248-1771
Web Site    reiclub.com/hml

Email    rehabs@brookviewfinancial.com

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