The qualifying criteria for a hard money loan varies widely by lender and loan purpose. Credit scores, income and other conventional lending criteria may be analyzed. Most hard money lenders primarily qualify a loan amount based on the value of the real estate being collateralized and the purchase price.
Typically, the biggest loan one can expect would be between 55% and 70% of the property value. That is, if the property is worth $100,000, the lender would advance $65,000 – $70,000 against it. This low LTV (loan to value) provides added security for the lender, in case the borrower does not pay and they have to foreclose on the property. Also, Hard Money lenders typically require a down payment of 20-30%.
Hard money lenders structure loans based on a percentage of the quick-sale value of the subject property. This is called the loan-to-value or LTV ratio and typically hovers around 60% of the market value of the property. For the purpose of determining an LTV, the word “value” is defined by todays retail market depending on the condition of the property.
The rate is not dependent on the Bank Rate. It is instead more dependent on the real estate market and availability of hard money credit. For the past decade hard money has ranged from the mid 12%–21% range. When a borrower defaults they may be charged a higher “Default Rate”. Some private lenders will collect a prepayment penalty and some will not.
Points on a hard money loan are traditionally 1 to 3 more than a traditional loan, which would amount to 3 to 6 points on the average hard loan.
• Trustee Sale Funding
• Bank Owned Property Sale Funding
• Cash for Auction Purchases
• Cash Funding for Short Sales & REO Properties
• Immediate Funding for Time Sensitive Real Estate Acquisitions
• No Points or Permanent Penalties
• Monthly Interest Only Payments
• Max 70% LTV and Min 20% Down
• No Interest Reserve
• 6 Month First Position Note
• In House Recording, Delivery to Trustee, Property Insurance and Title Insurance
1a) Complete our 60 Second Online Applicatiion
1b) Call or e-mail us with the property address, purchase price, and estimated value.
2) We’ll run our in-house analysis and return a proposed loan amount
3) We’ll prepare docs and invite you to our office for signing.
4) At that time, you’ll render your cashier’s check for the remaining down payment balance.
5) We deliver all payments to the trustee, allowing you to start marketing your property or focusing on your next buy.
Simply call or e-mail us. Once we agree upon a loan amount, you instruct the title company of your choice to send us a prelim inary title report. We’ll prepare the loan docs and deliver them to your escrow officer, then wire the funds directly to the title company on the selected close of escrow date.
CLEAR MORTGAGE, LLC MB 0910780
Michael Coffman, President
9399 S. Priest Drive
Tempe, AZ 85284