Private Hard Money
hard money lenders have picked up the slack while banks and traditional
lending institutions have practically cut off the flow of credit to
Private hard money lenders are non-bank,
who are either high networth individuals,
pension funds, Individual
Retirement Accounts (IRA's) or hedge funds
These lenders are looking for higher returns on their
and so they are attracted to hard money lending because of the
potential steady stream of high interest payments, backed by real
estate as collateral.
There is much confusion as to what
a hard money lender is and what set of rules they operate from.
I've run across borrowers who likened hard money lenders to
sharks" and "bottom feeders", or that taking a loan from a hard money
lender is like selling your soul to the devil.
The truth is,
these unconventional lenders have a very important role to play in our
credit markets, especially since traditional financial institutions
have severely tightened and have practically stopped extending credit
to qualified borrowers . Private hard money lenders are
misperceived partly because they seem to operate from outside the norm
and that they charge high rates and fees.
Here are some advantages of borrowing from private hard money
Private lenders can often fund and close a hard money loan
faster than a conventional lender. The decision maker is
the individual investor instead of a loan committee who has to go
through a rigorous underwriting process. If the key elements
required are present in the loan request package, it's not unusual for
a private hard money lender to fund and close in 7-10 business days.
times, the only required paperwork is a loan application, appraisal,
credit report, and the preliminary title report. Private
lenders do not care about credit scores, but they do take a look at
your credit report to see what other liabilities you may have.
you occupy your property as your primary residence, even hard money
lenders are now required to ask for proof that you are able to afford
the monthly payments based on your current income. You can no
longer go on stated income if you're applying for a loan on your
primary residence. Exception:
You can still go stated if you are using the loan proceeds
for business purposes.
You can still state your income if the property is
your primary home and you do not occupy it at the time of your
hard money lenders must adhere to the same laws with regards to process
and disclosures as a conventional loan. You as a consumer are
protected by the same laws that dictate rights of rescission,
foreclosure proceedings, and again, disclosures.
borrowers are spooked into thinking that hard money lenders are all
predatory and that they are there to "loan to own" and are waiting for
you to make the slightest mistake and "snake" the property from
underneath you. This is simply not the case. Hard
lenders are bound by the same laws as conventional lenders and are
subject to the same foreclosure procedures.
of Last Resort
hard money lenders serve as lenders of last resort and often times
needed to stop a pending foreclosure, or to save a lucrative deal that
needs to be funded and closed fast. Many savvy real estate
investors have been using hard money loans for decades. They
recognize the efficiency and effectiveness of using a private lender in
time sensitive situations. I myself have helped homeowners
pending foreclosures to get a hard money loan to cure the default, stop
the foreclosure, and buy some time for the borrower to execute a plan
to get back on track.
Where to Find Private Hard Money Lenders
are several ways to find private lenders. Please read below
then go to List of Hard Money Lenders to see a list of lenders in your
Direct Hard Money Lender
order to find a
private money lender directly, you will have to do the research
yourself. The internet makes it very easy to do a search and start
calling for information. You can also call some of your trusted real
estate agents and brokers to see if they know of anyone they would
highly recommend. But first, you need to learn what "direct
lender" exactly means:
If you call a lender and they tell you
that they are a direct lender, chances are that they are not "the
investor" themselves, but rather someone who is in charge of a mortgage
or investment fund that holds shares from several high net worth
individuals who pooled their money together to invest in trust deeds.
They may say that they are a direct hard money lender because
they have the decision making power to approve and fund the loan.
A true direct private hard money lender is "the" investor himself or
herself, funding loans with their own money.
any case, going through either type of direct private money lender may
save you on costs since it bypasses a hard money broker, therefore you
will not have to pay additional commission. Although
it may be beneficial to go through a broker. Please keep
Hard Money Broker
A licensed mortgage broker or
sales agent is also a very good source of hard money loans.
advertise on the internet as well as in magazines and newspapers.
These brokers represent the individual investors who rely on
brokers to properly underwrite and package the loan for submission and
approval by the interested investors. They often service the
money loans as well. Make sure you do your due dilligence on
whoever you decide to go with and don't forget to ask all the
Residential Hard Money Loan
Go to List of Hard Money Lenders
from Private Hard Money
Lenders to Foreclosure