Tag Archives: short term
Hard money lenders explained
I recently attended a real estate investment seminar in Las Vegas. Between speeches by different gurus I would mingle with other investors and explain that I owned a hard money brokerage firm. Even though it has been around for almost a hundred years now, I was amazed how hard money lenders still seem to be mysterious to many investors. They either did not understand how the hard money lending industry worked or had heard that it was something they should avoid like the plague.
To put it simply, hard money loans are short term loans that are used for various real estate projects. The most common projects are house flipping, but they are also used in commercial construction and land development. Essentially, a hard money loan is often the best choice for money that is needed on a short term basis.
Unlike conventional financing, a hard money loan also known as a private loan originates from a private individual or institution unlike a bank. The loans are generally short term between 6 and 12 months and have a high, interest only payment generally between 10% and 14%
Another major difference between a hard money loan and a conventional loan is that a hard money loan is not based on a persons credit but instead on the value of the project after its completion. A good example is if John has a house that he wishes to rehab and sell for $100,000.00 a hard money lender will lend up to $65,000.00. This is what is known as Loan to Value or LTV. Most hard money lenders lend anywhere from 55% to 70% LTV depending upon what type of project the borrower has.
Now you are probably asking yourself what the catch is, how do these lenders make there money? Hard money lenders make there money 3 different ways. The first way they make there money is the closing costs. These are anywhere from 1 to 4 percentage points of the overall loan. These points are paid when the loan is completely paid off in full. The second way they make there money is the interest only monthly payments on the loan which is anywhere from 10% to 14%. The third way they make there money is if the borrower happens to default on the loan. Being as the loan is not based on the persons credit, hard money loans are secured by the property itself. If a borrower defaults, the hard money lender now has a property or piece of land for 65% of what it is worth. However, it should be stated that this rarely occurs as most hard money lenders are not in the business of foreclosing on properties.
So should a borrower use a hard money lender? The simple answer is if a borrower has a real estate project that needs short term financing that a conventional bank will not lend on, yes.
Payday One Hour Loans – Living from Payday to Payday?
Most of us have heard the expression “living from payday to payday,” some of us have even lived it. But what happens when demands on your resources won’t wait until payday? One hour payday loans are a quick and easy way to handle the occasional financial crisis. Acquiring a payday loan is a simple Google search away to finding a qualified lender to serve you and your needs. Generally, all that is needed is to provide your personal information on an online form. Financial information is also shared so the funds can be deposited directly into your account. After the form is submitted and your information has been verified you are than approved. In most cases the approval process takes just minutes to complete. The funds are then directed into your account and available to you for immediate withdrawal.
The four major requirements that lenders have for buyers are: at least 18 years of age, employed for at least six months, an income of $1200 – $1500 a month and a bank account with direct deposit capabilities. These four things are key as you will definitely not be approved without any of these few essentials. Other factors may also come into play such as whether or not you are employed or just unemployed and collecting benefits, self employed or on active military duty. The customer can not be in default on any other one hour payday loan or have an active loan account with any other lender at the time of request. These are short term loans for amounts ranging from $100 – $1000 and are meant to be paid back quickly, usually in not more than two weeks.
Because one hour payday loans are secured against your next paycheck a credit check is not necessary and not a factor in determining your eligibility. Because these loans are so short term the interest rate is very high. In fact the cost can vary from $15 – $30 for every $100 that you borrow which is a steep price but this is most likely just a one time payment and the emergency relief this quick cash brings makes it worth it. You, as the borrower in effect are writing a post dated check to the lender for the amount of the loan plus fees. On the established payback date the lending institution withdraws the amount of the loan from your bank account. If the required amount is not available to them then more late fees and penalties are tacked on to your total.
While one hour payday loans are a handy and easily accessible source of quick emergency cash it is imperative that you repay the loan on time or your financial problems will just be compounded. Continually asking for extensions from payday to payday will eventually accumulate so much in interest and penalties that the borrower finds themselves in the position of being unable to fulfill their obligation. In extreme cases criminal prosecution is an option for the lender resulting in judgments against you. One hour payday loans are a very viable option for unforeseen expenses such as medical bills or car repair. Do your research, shop around and find the loan provider that best suits your needs. Compare rates, fees and payment options just make sure that you will have the resources to repay on time before you sign on the dotted line.