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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