Posted by Jill on October 07, 2001 at 20:58:10:
Thank you so very much for responding. Yet, I am still confused as to rather or not you feel that I should get a line of credit at the bank for the areas that hard money lenders will not lend in and rather or not I should use by name or form a corporation to get the line of credit in. Please respond and thank you so very much.
Hard Money Loan - Posted by Jill
Posted by Jill on October 07, 2001 at 18:24:07:
Hello To All! Can someone explain to me how a Hard Money Loan works? I am in a rural area therefore I am having a hard time getting these types of loans. I was wondering about going to the bank and getting a line of credit as I do have excellent credit. Any advise would be helpful. I want to flip property yet I want to make sure the funds are there in case I can’t flip. Also, what type of money do I need to plan for a closing on a bank owned propety and down payment. Also, if I use a line of credit should I use a corporation to do this or should I use my own name. I am just starting therefore I have formed no corporation nor LLC. Thanks
Re: Hard Money Loan - Posted by Ed Garcia
Posted by Ed Garcia on October 07, 2001 at 20:37:16:
Hard Money Loan.
A loan that is underwritten with the condition and value of the property as the
primary criteria for approval. Secondary issues may include the credit of the borrower, the ability of the borrower to repay the loan and/or the ability of the borrower to manage the property or successfully complete a rehab and sell the property. Owner occupancy, debt ratios and other issues are seldom a factor. Appraisals rather than purchase prices are used to determine value. Cash out purchases are often allowed and are another key benefit. These loans are usually approved within days and are often funded in two weeks or under with times as short as two or three days not uncommon. The cost for the benefits
of speed of funding, lax underwriting and other advantages is typically a moderately high interest rate (usually low to mid teens) and high points (usually 5 to 10).
This is the definition given in Glossary Of Common Terms Used In Loan And Lending By Ed Wachsman.
You’ll find this in the How- to- Articles of this site. I would like to recommend you visit this area of The site because it is very informative.
The bottom line on Hard Money Loans, is that they are loans made, based on the equity of property. Your income, credit, or any other criteria is not a consideration.
Ed Garcia