Qualifying For Private Money Lending
Qualifying for private money lending is an alternative financing program that streamlines investment financing for non-occupant investment properties. It is asset based and does not require all of the extensive paperwork a bank or commercial bank requires. Traditional mortgage lenders will require good credit scores, two years tax returns, bank statements, and other documents in order to close a mortgage loan. However, with private money lending, lenders mainly consider the amount of down payment the property buyer can put down so they have skin in the game. Closings with private money lending is often much quicker than traditional lending.
How Do I Get Cash Out Of My Investor Property Without All Bank Paperwork?
This question is probably the main driving force Real Estate investors, rehabbers, and Realtors with current investors, and new investor clients turn to private lenders, or so called hard money lenders.
Qualifying For Private Money Lending Versus Traditional Bank Loans
Banks, Credit Unions, traditional Fannie Mae, Freddie Mac, and Wall Street mortgage lenders have made it so labor and paperwork intensive, and credit review restrictive it is virtually impossible for the average person to get cash out from the equity of their current investment properties. Even if you qualify for the Bank mortgage, or your mortgage broker finds you a more traditional lender, you need to have plenty of cash reserves to get the mortgage. You can be on the job for 10 years, have plenty of income, have 720 credit score, and have very low credit payments, but if you don’t have 6 future mortgage, tax, and insurance payments, plus good retirement accounts such as 401k’s and IRA’s, you won’t qualify for a loan.
Who Are Borrowers Qualifying For Private Money Lending?
Basically, most the people that qualify for Bank loans, don’t need the money. What these means is Private Money, and Hard Money lenders are in more demand than ever before.
Credit Requirements For Banks Versus Qualifying For Private Money Lending
What if your credit isn’t perfect, and you have a single family house or multi-unit investment property with plenty of equity? Walk into your neighbor bank and ask the friendly personal banker what she thinks the chances of you getting a loan are. Then when they tell you know walk into one of the big four banks that you see on every other corner and advertise how much they are in business to help you. If you don’t already know, and I assume most people reading this do know, they aren’t going to show you any love! Which means they aren’t going to extend you any credit, lend you any money, but Chase does have free coffee, and Wells Fargo has nice pens. …and all of these banks will let you open an account, take your cash deposits, pay you .46% interest annually, and lend your money to other more “ borrowers” who probably don’t need the money as much as you.
Mortgage Rates On Private Money Lending
Private and Hard Money lenders often have higher interest rates, but give you less hassle. They typically lend you only about 65% of what your property appraises for. They are very lenient on credit, some don’t care at all, and most of the time they are really fast. They know most of the time you are borrowing money to buy another property and you make your money when you buy the property at really cheap price; or you are borrowing the money to fix up your property so you can “flip it” and sell it for 30-100% profit.
Who Are Private Money Lending Investors?
The Private and Hard Money Lender in many ways is just like their typical borrower. They want double digit return on their typically 12-18%. They don’t want to earn .46% annually from Bank of America. They don’t want you to provide 3 years of tax returns, a blood and urine sample. They want you to borrow the money, make a lot of money on your cash investment, and then turn around and come back to them and borrow money again.
Private Money Lenders Are More Concerned With Equity Versus Credit
Just remember the driving force of a Private Money or Hard Money Lender is Equity you have on your Single Family, 1-4 units, or commercial investment properties.
If you have any questions or comments, or would like a referral to a reputable Private or Hard Money Lender, please contact Vince Liguori at 847-561-0217 or Gustan Cho at 262-716-8151 or email GustanCho@Outlook.com.