Scenarios that May Require Hard Money Loans
For many, private money loans are the go-to option for real estate investors with experience and who need a fast and reliable source of funds to help finance their commercial and residential real estate investments. Leader Mortgage Services provides all types of real estate projects. Some of the most common projects and financing options we provide include:
- Bridge loans
- Multifamily private money loans
- Purchase loans
- Land Loans
- Investment property loans
- Cash out refinance loans
- Estate and trust loans
- Construction loans
- Fix an Flip
We also provide service for other types of private money loans in Florida that are secured by some type of real estate.
What Exactly is a Private Money Mortgage?
Private money mortgages, also called private money loans, are very similar to conventional home mortgages that the majority of people are already familiar with. This type of loan is given to a borrower who has residential real estate to use as collateral for the loan they need. The primary difference is that the private money mortgage funds come from private investors – the private money lenders – rather than credit unions and banks.
With private money lenders, they are not as concerned with income history and credit scores. Instead, they look at the property’s value along with the total amount of equity the borrower actually has in the property in question. The focus on equity and value offers more flexibility that provides for private money lenders to be able to approve the funds faster than usual. Thanks to the fast approvals and the funding availability, real estate investors are able to utilize the services of a private money lender for all types of residential real estate financing.
In most cases, a private money lender is going to demand a down payment of a minimum of 25 percent. The down payment that these lenders require are usually higher than what is required from credit unions or banks but the trade off is that a private money lender has fewer requirements to get a loan approved. These lenders are also able to overlook issues such as poor credit along with other issues that may be on a borrower’s record, including short sales, bankruptcies, and foreclosures.
For most situations, private money lending is used for short-term purposes only. Borrowers are required to have an exit strategy for the private money loan when they apply. Lenders are often agreeable to terms of three to four years in most cases. Some of the most common types of exit strategies for a private money loan include refinancing using a long-term conventional loan or to sell the property to recoup the money loaned.
A private money lender in Florida is typically going to have a higher interest rate than more traditional 30-year bank loans. Usually, the interest rates charged by private money lenders range from the eight to 15 percent range depending on the specific lender, borrower, and the specific property along with the loan value that’s being requested. Even though the interest rates for a private money loan are much higher compared to a conventional bank loan, the quick funding and flexible lending criteria are usually worth the additional expense, especially for any real estate investor who wants to take advantage of this type of limited-time opportunity. Since a private money mortgage is only available for a short period, the total interest expense isn’t usually that significant during the course of the total investment.
Florida private lenders usually charge much lower interest rates than the private lenders in different states. There are several private money lenders in Florida and the increased competition helps to push the total interest rates lower.
Tips for Acquiring a Private Money Loan from Leader Mortgage Services
The process required to apply for a private money loan with our team from Leader Mortgage Services is both easy and fast. All you (the borrower) has to do is to submit the application for the private money loan. After our team at Leader Mortgage Services has received the loan, we will notify you (the borrower) whether your request for a private money loan is approved, or not. This approval process is typically done the same day that the application has been received.
After being approved, our team will provide funding for the loan in just three to seven days for the investment property in question.
In most cases, loan approval is based on the existing value of the real estate being used as collateral, along with the borrower’s equity in the real estate. A person’s existing loan modifications, short sales, foreclosures, bankruptcies, credit scores and other issues present on a private money borrower’s record aren’t serious concerns for lenders if the borrower have a large enough down payment or enough equity in the real estate in question.
After the private money loan is fully approved and ready for funding, our team works quickly and closely with the borrower throughout the whole financing process. The lenders and attorneys will prepare the needed loan documents and disclosures and will answer any and all questions along the way. When the loan is ready for funding, our team will have the funds wired to the closing agent so that the deal can then be closed.
Contact Us for More Information
If you are interested in using our services, then reach out to us today. Our team will help ensure you get the funds you need for the investment you want to make. Be sure to read our terms and requirements to minimize the issues related to securing a loan. Our goal is to help make this process easy and hassle free for any borrower, regardless of the property, price, or location. Learn more by contacting us today. We are here to help you with any real estate need that you may have.