Posted by Ed Garcia on March 27, 2001 at 13:00:36:
Joe,
Let me see what I can do to answer some of your questions.
- What exactly is a hard-money lender
ANSWER:
Hard Money Loan.
A loan that is underwritten with the condition and value of the property as the primary criteria for
approval. Secondary issues may include the credit of the borrower, the ability of the borrower to repay the loan and/or
the ability of the borrower to manage the property or successfully complete a rehab and sell the property. Owner
occupancy, debt ratios and other issues are seldom a factor. Appraisals rather than purchase prices are used to determine
value. Cash out purchases are often allowed and are another key benefit. These loans are usually approved within days
and are often funded in two weeks or under with times as short as two or three days not uncommon. The cost for the
benefits of speed of funding, lax underwriting and other advantages is typically a moderately high interest rate (usually low
to mid teens) and high points (usually 5 to 10).
- Is Ed Garcia a hard-money lender?
ANSWER:
I do Hard Money Loans in California but not Nationwide. The reason is, because Hard Money Loans are generally solicited out of the private sector or (Private Investors). As a rule a private investor in California would not want to make a loan in Alaska.
- How does a hard money lender help me with my deal?
ANSWER:
Because Hard Money Loans primary requirement is EQUITY, there isn’t any real underwriting criterion. As a result as stated above you can have bad credit and still get a loan. You can also do deals that may be none conforming etc.
- How do I get in touch with one, assuming I can come up with a decent deal?
ANSWER:
In Most cases I would suggest to look at lenders that are either local Finance Companies or your better Mortgage Brokers. I would also like to make note that some lenders disclose themselves as Hard Money Lenders and are not. In California Hard Money is everywhere, but in other states it’s a little more difficult to come by. I would more than likely look to Big Cities or metropolitan areas for Hard Money Loans.
Joe, today I’m starting to get ready to go to the Convention, so I can’t spend the time I would like in answering many of our posts as I normally would. But I hope that I’ve shined a little light on this subject for you.
Ed Garcia