Current Uses For Private Money
It’s Time To Be A Homeowner
The busy Real Estate Agent working with Buyers in today’s market needs the following lender line-up. 1. A 30 year fixed rate lender (FNMA/FHLMC). 2. An FHA and VA lender. 3. A credit union for those that just miss getting a 30 year fixed rate loan. 4. A Private or Hard Money Lender. And not necessarily in that order!
That is the current line-up to accommodate almost any Buyer for any residential property type. Keep in mind that most Hard Money lenders typically will also do more than 4 units, commercial, land loans and construction loans.
The typical Hard Money Buyer will have 30% or more down and will be buying a home he will be living in or a rental property. For someone buying a home they will occupy, they can spend up to 50% of their income for their house payment plus their other debts. Hard Money is pretty forgiving on credit. A person can have recent foreclosures, be in bankruptcy, done a recent short sale, have collections, liens, etc., or combinations of those.
Here is a real Hard Money Purchase Scenario and the Hard Money Loan Program for that Buyer:
Buyers are selling their home on a short sale and have saved up all the payments they did not make on their home being sold for the past 11 months. They had 2 rental properties that were foreclosed upon. The home they are selling is in contract for $310,000. They paid $605,000 for it in June 2006. They owed $484,000 and their monthly payment including taxes and insurance was $3,614. Their current lender would not allow a loan modification as they could not demonstrate any hardship. Both the husband and wife work and they make pretty good money between them.
Their favorite Real Estate Agent found them a home in their same neighborhood for $325,000. The home had been recently remodeled. They put 35% down and got a Hard Money Loan for $211,250. The interest rate was 12% (APR 12.698%) interest only for 85 months (7 years and 1 month). At the end of the 7 years there would be a balloon payment. There was no prepayment penalty. They paid 3.5% as a Loan Origination Fee, $895 Processing Fee and $295 for Document Preparation as well as escrow and title fees.
Their interest only monthly payment for the loan was $2,112. Property taxes were $338 and insurance was $70. Total payment was $2,520. The appeal to these Buyers was that their kids did not have to change schools, their payment went down $1,094 and they got their attention off the impending foreclosure.
Give me a call with your Hard Money scenarios and let me tell you how I can help.
Owner/Broker – The Guy in the White Hat
Forest Tardibuono is a CA DRE Broker with over 25 years experience in real estate and lending. His number is (707) 523-2099. See website @ www.sunpacmortgage.com.