Private Money Loans For Real Estate Investors

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In this blog, we will cover and discuss private money loans for real estate investors. Private Money Loans are loans from lenders to real estate investors who need funding quickly. Private money lenders are also known as a short-term commercial hard money lenders.

Non-QM Mortgage Brokers is known to be able to close and fund a loan in two to three weeks. In this article, we will discuss and cover Private Money Loans For Real Estate Investor’s Short Term Financing. In the following paragraphs, we will cover private money loans and how private money lending works.

Real Estate Investors Who Benefit From Private Money Loans

There are many types of investors who can benefit from private money loans. Real Estate Property Investors And Rehabbers with less-than-perfect credit can benefit from private money loans. Others who can benefit from private money loans are borrowers who cannot document income due to their self-employment status.

Can You Borrower Money From a Private Money Lender?

Private Money Lenders are very aggressive in lending money to those who need short-term financing. They are unlike bankers or traditional commercial mortgage lenders. Private money lenders have an open mind.

They understand that real estate investors will do everything possible to write as much off as possible. Therefore, showing substantial income can be a problem with traditional lenders. Most private money loans are no income verification. Lenders do not go by the borrower’s income and credit. They will underwrite the property.

Why Do People Want Hard Money Loans?

Lenders understand that real estate investors can go through rough times when their credit gets dinged. They fully understand self-employed borrowers who can write off many expenses, but that does not mean they do not make income.

Most upper management staff and hard money lending company officers are investors. They, too, fell victim to the 2008 real estate and credit meltdown.

Working With a Hard Money Lender

Lenders will take into account the overall financial and credit profile of borrowers. Low credit, prior bankruptcy, and prior foreclosure will have less impact when approving a hard money loan.

Borrowers must show skin in the game by coming up with larger down payments. By skin in the game, hard money lenders want to see a substantial down payment from borrowers, such as a minimum of 25% down payment or more.

What Is a No-Hassle Private Money Loan?

Tens of thousands of Americans cannot qualify for bank financing. After the Real Estate and mortgage meltdown of 2008, thousands of new lending regulations got passed under the Dodd-Frank Mortgage and Banking Reforms. The great benefit of private and hard money loans is that they are not regulated like residential mortgages.

Using NON-QM Loans For Primary Home Financing

Non-QM loans are non-traditional mortgages that cannot be sold to Fannie/Freddie. There is no-income verification on non-QM loans, in general. Non-QM mortgages can close in three weeks or less.

NON-QM Loans and alternative financing loan program is ideal for home buyers who cannot quite meet the mortgage guidelines on government and conventional loan programs. There is no waiting period after bankruptcy and foreclosure.

Alternative Financing With No Income Documents

Our Non-QM Mortage Brokers, Inc. hard money loan program has been designed for borrowers with one or more of these situations. Self-employed borrowers with no income tax returns are required. Trouble documenting income due to the massive write-offs the borrower can deduct from their tax returns. Inconsistent income history and declining income.

Credit issues due to a recent mortgage loan modification, short sale, bankruptcy, deed-in-lieu of foreclosure, or foreclosure. Bankruptcy in the past seven years. No Doc Fix and Flip Loans with acquisition plus rehab financing. Investment property loans. Blanket Line Of Credit on Investment Property Portfolio.

Non-QM and Alternative Loans For Real Estate Investors

Non-QM Mortgage Brokers are specialists in the following:

• • Private money lending
  • Hard money financing
  • No Doc Fix and Flip Loans
  • Portfolio Line of Credit for real estate investors

• Commercial Loans
• Investment Property Loans with rehab financing

The Fast & Easy Short-Term Bridge Private Money Loans

There are situations where many real estate investors or property flippers seeking private money loans have a purchase opportunity that may be that deal in a lifetime where there is not enough time to get a traditional conventional loan. What happens, then? Do you scramble and see if you can borrow money from friends and family? Sell your toys, such as your Ferrari or Rolex, or Boat.\

Or if you qualify for a fast conventional loan. But there is an issue with your credit that can get fixed, but there is not enough time to purchase that home or investment property for real estate investors who can qualify for a conventional loan in a year or less. Our Fast Track Bridge Private Money Loan Program has a fast-track financing solution for real estate purchases where it closes and funds in 3 weeks or less.

How To Use Private Money For Real Estate?

There are instances where real estate investors need a fast-track mortgage loan program for an investment property. It can be to get a deal of a lifetime, or it can be to meet debt obligations. In other cases, borrowers need a private loan to purchase another home before selling the home they are currently living as an owner-occupant.

Homebuyers making an aggressive cash offer on a hot property in an as-is condition need to close the real estate transaction in a few weeks. Cases where bank financing got canceled or denied at the last minute, and financing contingency has expired.

How Do I Find a Private Money Loan Lender?

There are situations where you need to secure a private money loan and close it quickly. Need time to repair credit to get rid of derogatory and inaccurate information from credit reports to qualify for traditional financing.

Private money loans may be your best alternative. Private money loans can fund in less than three weeks. Contact us at Non-QM Mortgage Brokers at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. We are available seven days a week, evenings, weekends, and holidays.

Is A Private Mortgage Right for You For Investing In Real Estate

Private Mortgage is sometimes referred to as Owner Financing, and Hard Money has many advantages and disadvantages. However, you need to generalize the two types of Private Mortgages.

This is a loan made to someone buying a home in which the property seller is taking in payments as made would on a more traditional mortgage. The Buyer has an amortization schedule for 15 or 30 years, similar to a regular mortgage they might get from Wells Fargo.

What Is an Example of Owner Financing?

This type of Private Mortgage is called seller or owner financing. Non-bank and non-traditional mortgage company lenders make Private Mortgages.

They are typically made at much higher rates for borrowers that banks, credit unions, and traditional mortgage companies would consider riskier borrower types. They are often referred to as Hard Money. The following paragraphs will discuss and cover Is A Private Mortgage is Right for You For Investing In Real Estate.

What Is a Private Money Real Estate Loan?

Here is a list of just some of the reasons a Private or Hard Money Mortgage might be right for you:

1. You have bad or simply challenging credit
2. You have decent credit, but for some reason, your credit score is lower than the requirement set by the banks.
3. You have difficulty documenting your income, haven’t filed current tax returns, or are self-employed and need a lender to look at your income situation differently.
4. Your property is not in good shape and needs to be rehabbed or renovated
5. Your property type is commercial or has a commercial feature that does not conform to Fannie or Freddie Mac Standards
6. You are trying to buy a property that has a nonconforming element to it, such as a storefront or illegal rentals
7. You have more than four current mortgaged properties
8. Your current property is not fully rented
9. It would be best if you had cash to purchase another property
10. It would be best if you had cash for business purposes
11. It would be best if you had cash to back real estate taxes
12. It would help if you had cash to pay bank IRS or State tax liens
13. You would like to pledge multiple properties to get a loan
14. You are purchasing a business that does not have an established cash flow, such as a new bar or restaurant
15. A Bank, Credit Union, or traditional credit union has turned you down

Interest Rates on Hard Money Loans

You will pay a higher interest rate with a Private or Hard Money Mortgage. You typically have a much larger down payment if you buy a property or require plenty of equity in your current property to qualify.

The rates range from 10 to 18%, whereas a bank mortgage ranges from 4.5 to 5.5%. This benefit of what a private money mortgage benefit would help you achieve would have to outweigh the interest rate you would be paying. Ultimately, you must decide on your own if a Private Money Mortgage is right for you.

What Is The Definition of Private Money For Real Estate Investors?

What is private money? Private money lenders are investors who pool their funds together. They lend to real estate investors looking for short-term financing. Private money lenders are not regulated like residential mortgage lenders. Federal and state mortgage lending guidelines and RESPA laws do not apply to them. Every private money lender can have its lending requirements.

Most private money lenders are concerned with investors putting their skin in the game. By skin in the game, it is a larger down payment on their property purchase. This is not the end of the world. 90% of people that walk into their bank, local credit union, or even their mortgage broker’s office and try to get a loan on their investment single family, 1-4 unit, or commercial property get turned down. Private money lenders have much easier lending requirements than banks or traditional lenders do. In this article, we will discuss and cover Private Money For Real Estate Investors.

Private Money To The Rescue

Don’t let the above discouraging statement get you down. Private Money or Hard Money Lenders can offer you a solution to your mortgage cash needs! Often, they can get you check-in in less than ten days. Take just 3 minutes of your valuable time and read this entire article.

Credit Criteria For Private Money

Banks want two years, sometimes three years, of tax returns. They want you to have perfect credit and heavy cash reserves. Most of the time, they want those reserves deposited with them — the bank you are applying for the Mortgage with. They may even tell you yes upfront. Then you spend $450-$750 on a residential or $2-$4,000 on a commercial appraisal. Mortgage lenders will get all the facts to send your loan to the “evil loan committee.” This typically means the bank loan officer wasn’t that confident about your loan application in the first place. You are more than likely on your way to getting turned down.

Private Lenders Think Outside The Box

Borrowing from a bank to get cash to buy another property, repair, or rehab your current investment property has never been more difficult. Banks don’t look at your end game, but if you have $2,000 in your pocket, they want you to deposit it. If you put your $2,000 in a cd for five years, they will lend you $1,000. How nice of them. Remember when we again raised taxes to give the banks trillions of dollars to bail them out and make lending so much easier? Did they make cash more available? No, they did not.

Hard Money Lenders Are The Angels For Home Flippers

Private and Hard Money Lenders ironically have become the champion of the Real Estate Investor and property “flipper” and “rehabber.” This hasn’t happened because it was the Hard Money Lender’s grand plan. It happened by accident and out of necessity

3 Golden Rules Of Private Money

The 3 “Golden Rules” of the Private Money Lender and Hard Money Lender are:

1. If you have a lot of equity on your single-family home, 1-4 unit, or commercial property, they will lend you money, and
2. If you have a good exit strategy or purpose for borrowing the money, you are more likely to get the loan
3. For example, you need the money to buy another property that you will fix up and “flip, or you need to fix the property you are borrowing money on so you can sell it.

Mortgage Rates on Hard Money Loans

You will pay a higher rate than at a bank, typically from 12-15% instead of 4.5-5.5%. So, reflect back to “Golden Rule” number 2. This is because you must demonstrate to the Hard Money Lender why borrowing the money at a higher rate will improve your overall financial position.

Lenders Want You To Make Money, So They Make Money

Hard Money Lenders want real estate investors to make money so they can keep coming back and borrowing more money. They don’t want to be foreclosing and having their attorneys make money. Once borrowers develop a strong business relationship with private money lenders. Lenders may begin to ease up on fees and down payment requirements.

Investment Loans With Bad Credit With Private Money

Private or Hard Money lenders will often lend you money regardless of credit and without two years of tax returns. I want to repeat that: You don’t always need to show Tax Returns with Private Lenders or Hard Money Lenders. However, you typically need a property with a lot of equity. Most Private or Hard Money lenders will only lend you 65% of what your property is worth.

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