Residential Hard Money and Private Money Loans:
Whether you're looking for Private Money or Hard Money for your personal residence or an investment home, you have come to the right place.
Private Money and Hard Money financing is available for most properties. Also remember if you own multiple properties to tell the lender. Hard money and Private money lenders are likely to give a higher loan to value if they have other properties to cross collateralize. To find a lender in your state choose from the Map Below
How does Residential Hard Money Work? A hard money loan is a real estate mortgage collateralized against the true as is value of the property for which the loan is made. Most lenders would prefer to usually fund in the first lien position, meaning that there is no senior mortgage holder. Many lenders will subordinate to another first lien position loan; this loan is known as a mezzanine loan or second lien. These are harder and at times more expensive loans.
Most lenders structure their loans based on a percentage of the quick-sale value of the subject property. This is called the loan-to-value or LTV ratio and typically hovers between 50-75% of the market value of the property. This changes with the economy, strength of the deal and borrower. The LTV can also go much higher if you have other properties to cross collateralize or other assets the lender may see as desirable. We have seen instances of a large wine collection, art and coins to name a few. How to determine your LTV. Determining your LTV, the word "value" is defined as "today's purchase price." This is the amount a lender could reasonably expect to realize from the sale of the property in the event that the loan defaults and the property must be sold in a one- to three-month time frame. This value differs from a market value appraisal, which assumes an arms-length transaction in which neither buyer nor seller is acting under duress.
Typically hard money or private money loans close quickly with localized lenders. This is one of the most important parts of the equation. A local lender knows your area and therefore has a greater comfort level. Many times a local lender can make a decision on the spot and forgo the appraisal and other due diligence factors a lender who is far away can't.
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Rules and Regulations are changing every day. Make sure your lender is up to speed on the new rules and regulations set forth by your state.