"If they want peace, nations should avoid the pin-pricks that precede cannon shots."Napoleon Bonaparte
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Refinancing: When is it worth it?
When is it worth it to refinance your house? This guide will take you through a couple of the points you'll need to know about when you're trying to decide whether to refinance your mortgage or not. Generally, you need to be aware of what the interest ...
Refinancing Your Auto Loan Can Save You Money
Record Low Interest Rates Makes It A Great Time For Auto Loan Refinancing! It is no wonder that auto loan refinancing has suddenly become a hot topic of conversation. Record low interest rates generally leads to record high refinancing. However, when ...
Types of Mortgage Loans - The Basics
In the past, homebuyers more or less had limited mortgage loan options. These days, there are more options than you can shake a stick at, but here's a primer on the basics. Mortgage Loans With the real estate market explosion over the last 10 years, ...
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Would it help you as a real estate
investor to be able to "Close For Cash
in Days," even if you're tapped out
financially?
Hard money lenders are perhaps the best
way to get 100% financing with easy
qualifying, money for fix- up, and fast
closings.
So what can hard money lenders do for
you? Hard money lenders make
relatively short term (12-24 month)
loans to real estate investors for
the purposes of acquiring the property
and rehabbing the property.
These loans are often funded by pools
of private investors that have been
grouped together into a pool of capital
by a lender.
The hard money lender is looking for
maximum return, and is willing to take
more risk for this return in the form
of easier lending standards.
If you strike the right purchase deal,
you can even borrow 100% of the
purchase price plus some or all of your
repair money by using hard money
lenders. Here's how it works.
Hard money lenders typically loan 65%
of the ARV or After Repair Value of the
property when it is repaired or ready
for resale.
That 65% loaned by the hard money
lender is calculated based on the value
of the property AFTER REPAIRS, not as
it currently sits, and not based on the
price is being paid for the property.
For example, Say that the owner is
willing to sell me his house for
$60,000. The hard money lender's appraiser agreed with my assessment
that the home could be sold for $100,000 once it was fixed up. That
appraisal would allow me to borrow 65%
of the $100,000, or $65,000. I'm only
paying $60,000 for the property, so
guess where that extra $5,000 goes?
Unfortunately, not into my vacation
fund!
The extra loan proceeds go into an
escrow account held by the hard money
lender, and I can draw it out as I do
repairs.
Remember, hard money lenders are not
concerned with your personal credit to
the level that traditional lenders are.
They're concerned with the property.
They know that their loan is fairly
secure if you default.
What's bad about hard money loans?
The fees are higher than conventional
financing.
Hard moneylenders in my area charge 15%
interest, and 5% of the value of the
loan in closing costs ("five points").
Thus, on a hundred thousand dollar
loan, there would be $5,000 in fees to
the lender to close the loan, plus
attorney's fees and other charges.
Secondly, the loans usually are only
good for 12-24 months.
After that time,you have to refinance.
If you haven't sold it by then, you
have to get a new loan, pay more fees,
etc.
These are not loans to buy rentals with.
Another disadvantage is the fact that
most hard money lenders don't figure
the payments on a 30-year basis. The
longer the payments stretch out, the
cheaper the payment.
They figure these loans on 15 or even
10-year terms. Thus, the monthly
payment that you must pay is much
higher than it would be on a
conventional 30 year amortization
schedule.
Also, hard money lenders are often more
difficult to find than traditional
funding sources. As a gift, I have
compiled a national list of hard money
lenders at my site to solve this problem for you.
Finally, most hard money lenders
require a pre-payment penalty that must
be paid if you refinance or pay off the
mortgage before a given amount of
time. Fortunately, this time period is
often fairly short. For example, the
hard money lender that I use has a two
month pre-payment penalty period. Even
if I am not going to do much work on the
property, and have a contract on it
quickly, I can just set up the closing
for after the pre-payment penalty
expires.
In conclusion, hard money lenders
present an attractive option for
investors to succeed without having to
resort to the late night TV creative
hype that we've probably all been
exposed to. If you can qualify for
traditional financing, and your seller
is comfortable with a longer closing
window, you may want to stay with
conventional financing.
However, if down payment money is tight
and your credit is not perfect, or you
need to close very quickly, hard money
lenders may be a viable solution since
they will allow almost anyone who can
find a good deal to purchase a
property extremely quickly, with less
red tape, get money for rehab, and have
virtually unlimited access to cash.
______________________________________
Download Dave Whisnant's FREE 50 state
hard money lender list and forever
banish the problem of where to find the
cash for your deals! Go to
http://www.realestateinvestingbrain.com/freehmlist.html
About the Author
Download Dave Whisnant's FREE 50 state hard money lender list and forever banish the problem of where to find the cash for your deals! Go to http://www.realestateinvestingbrain.com/freehmlist.html
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Boomers and refis: a warningMiamiHerald.comAsset rich retirees hoping to refinance their mortgages are finding they may be considered income-deficient. By KENNETH R. HARNEY It's a mortgage problem that is likely to intensify as homeowning baby boomers by the millions shift into retirement: ...and more » |
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