Hard Money Bridge Loans – How Could They Help Me?

I would like to start with the main idea behind hard money bridge loans, which is quite straightforward.

A bridge is something, which connects two different corners and in this way helps you to overcome any difficulty in an easy and timely manner. For example, if there is huge river between two roads, then a bridge could help you in crossing that river within a short span of time.

Similarly, private or hard money also helps the investor to go from one corner to another, with the help of hard money loans.

So, the basic purpose of a bridge is to help you cross the distance as fast as possible i.e. it is short term and the people who uses that bridge already know their destination and that’s why, they can decide what should be their exit strategy.

The same holds true for private money or hard money as this is a kind of financing, which is for a short period of time and where the borrower knows their exit strategy. So, hard money financing is basically working as a bridge between you and your destination i.e. the property.

The ideal situation to understand this scenario is that you have a property in hand, which is quite good but it is in a foreclosure situation and the home-owner needs cash straightaway.

On the other hand, you are a home buyer, who is always looking for a good deal and you are willing to buy that piece of real estate but you need financing.

This is the place where hard money bridge loans can come to rescue you and the home owner. You can apply for loan and can buy that property.

Now, you can apply for loan via traditional lenders as well but it will take 2-3 months to give you a loan and they will ask you to fill several documentation. Within that period of time, there is a chance that you will lose that deal because if the home-owner is looking for quick cash, then he would not like to wait for 60-90 days.

In that scenario, there couldn’t be a better option than going for hard money bridge loans because it’s a short term loan and can be funded to you within few days.

You just need to make sure what’s your exit strategy is and when you would be able to return that loan. Another important aspect to get private money or hard money is to have a good equity position, which means that your loan application is based upon good collateral.

If you will compare bridge loans with the traditional lending, you will know the difference.

One of our clients told me his story of getting financing from a bank. Although, he had money in his bank account but he wanted to keep it as a flush fund.

So, he went to the bank and applied for financing on a property. But they wanted to know each and everything about him. His job, his credit history, his tax history and they asked him to provide documentation for all these things.

Eventually, the bank took months to give him financing and he was thinking that whether it was even worth going to the bank or not.

We need to understand that in this era of credit crunch, banks are also in a very difficult situation. They can’t lend you money easily because they have to follow strict rules and regulations.

On the other hand, private money lenders are held privately and they don’t follow any particular guidelines, so they can lend you money according to their own terms and conditions.

So, what he decided is that whenever he needs some quick cash, he will never go to the banks or conventional lenders because their processes are quite laborious and if he will wait for them to give him financing, then he will lose the property as good deals aren’t there for long.

That is why, a borrower would prefer to have bridge financing because they are really easy. They don’t care whether you have a poor credit history or you have recently lost your job.

If you want to get hard money bridge loans, then the only requirement is to have good equity. That’s it. The lenders will send independent evaluators to draw comparables and based upon those reports, bridge lenders will fund you a loan, which would be a short term loan for 6 months max.

Being an investor, one should understand that private money or hard money is equity driven and they are lending based upon the asset i.e. the property and nothing else.

Yes We Can Even Arrange Bridging (Hard Money) Loans For Purchasing Or Developing Gold Mines

What can Bridging (Hard Money) Loans be used for? A lot more than most people think. Most members of the public have never heard of Bridging (Hard Money) Loans and even those that have wrongly think they can only be used to complete the purchase of a new property when the sale of their existing property has not completed yet. This would be where extending the completion date of the purchase of their new property is not possible.

A part from covering the gap in house purchases bridging loans can be used for many other reasons such as

·  Purchasing Below Market Value Properties (BMV).
·  Pay of death duties.
·  Pay VAT and Inland Revenue liabilities.
·  Raise capital for business acquisitions.
·  Securing the fast purchase of residential and commercial property opportunities.
·  Purchase of land with planning consent.
·  Or even purchase or develop a Gold Mine.
·  In fact money can be raised for any legal purpose.

Yes we can arrange funding for the purchase or development of gold mines almost anywhere in the world. As can be appreciated this is not easy and requires a lot of due diligence on behalf of the lender. The due diligence will confirm the value of the mine and the expected reserves; these will be confirmed by geological survey including the taking of samples of the mineral bearing strata. It is the reserves that give the mine it’s value. If the reserves are low or it is uneconomic to extract the gold then the mine’s value will be diminished.

Fortunately one of our panel of lenders will consider lending Bridging (Hard Money) Finance to assist with the purchase or development of Gold Mines. Our funder will lend on all types of commodity mines almost any where in the world. They will lend up to 70-75% of the forced sale value of the mine over a term of 1 year for Bridging Loans and 3 years for Development Loans.

As would be expected on technically complicated finance deals like these the due diligence costs are higher than for a loan secured on an actual residential or commercial property or development.

Home Mortgage Financing Alternatives For Those With Less Than Perfect Credit

In order to obtain a home mortgage through conventional lending institutions, borrowers must have a fico score of 750 or higher. Additionally, borrowers must exhibit a strong history of paying loans on time and a solid work history. Fortunately, financing alternatives are available for individuals with less-than-perfect credit.

One home mortgage option is known as seller carry back financing. Using this strategy, sellers act as the lender and personally finance all or a portion of the purchase price. Seller carry back mortgages typically extend for two to five years; giving borrowers time to clear negative credit. Once the contract expires, borrowers refinance the loan through a traditional lender.

Another home mortgage finance option is rent-to-own real estate. Buyers reside in the home and pay the property owner rent. A portion of rent money is contributed toward purchasing the house. Most sellers of lease to own properties require a 10- to 20-percent down payment. Contracts last between two and three years and help buyers establish a solid payment history.

Buyers engaging in seller carry back or lease to own transactions should have contracts reviewed by a real estate lawyer. Home mortgage contracts should include default clauses to protect both seller and buyer.

Buyers should make monthly payments via bank check. This will help expedite verification of payments when borrowers are ready to obtain home mortgage financing through a traditional lender. Paying with cash or money orders is strongly discouraged unless the seller provides notarized receipts.

A third option for obtaining home mortgage financing is through private real estate investors or investment groups. This type of lending practice is referenced as hard money loans.

While hard money financing can help bad credit borrowers purchase a home, these loans are not cheap. Interest rates typically range between 15- and 20-percent. Down payment requirements range between 25- and 50-percent.

Hard money loans are intended for short term financing. Terms usually extend between one and three years. Individuals who obtain private lender mortgage loans should strive to refinance through a conventional lender as quickly as possible. Most banks will approve home mortgage loans once borrowers establish a consistent payment record of 12 to 14 months.

The Department of Housing and Urban Development provides several home buyer assistance programs. HUD loans are available to low-income buyers and people employed in certain fields such as teachers, fire fighters and police officers.

The Federal Housing Administration provides loans to borrowers who meet eligibility requirements. FHA loan applicants must provide proof of income, real estate property appraisal, and source of down payment; e.g.; monetary gift from family, inheritance, or savings account. Lending limits vary by state and borrowers must work with an FHA-approved mortgage broker.

Individuals who cannot obtain home loan financing should strive to clear negative history and work on improving their FICO score. Individuals should obtain a copy of credit reports from Trans Union, Equifax and Experian.

The fastest way to improve credit scores is to reduce credit card debt. Strive to reduce balances to 20-percent of the credit limit. For example, if the limit is $5000 the outstanding balance should not exceed $1000.

Another important factor of improving credit scores is to pay all bills on time each month. Credit scores can increase 100 to 300 points by reducing outstanding debt and consistently paying bills on time.

Higher fico scores equal lower home mortgage loan interest rates, which equals reduced monthly payments. Your credit rating is one of your most valuable assets. Take every step possible to protect it.