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Short-term loans are available by hard money lenders based on real-estate as collateral. The amount of these loans depends on the real estate value. The ratio between the amount of the loan and the value of the real estate depends on many variables, including the kind of real estate and the lender. These loans tend to be high interest and are independent of bank standards.

The reason why these loans ask for high interest is because the lender is taking a high risk. The chances of default are high because the borrower does not have to prove a good credit history. These loans are often considered by borrowers because they can’t get financed by banks for reasons like poor credit.

Although real estate is the preferred form of collateral, other assets may also be considered. This cross collateralization may help with improving the LTV, the loan to value ratio, because the loan is not based on the total value of the property, but only on a percentage of it.

Hard money lenders may serve either a local or national market. They may work with a broker for a percentage. It’s also possible for a lender to work directly with a borrower. The fees for their services depend on many factors. For example, some may charge application fees while others may charge prepayment penalties.

The Hard Money Team can offer essential information on hard money lending. They can be contacted at 512-692-4195. Call them today for more information.

One thing borrowers did not take into consideration was that the mortgage was an adjustable mortgage rate. This meant that the original interest rate was only for a short time. It was a teaser. What new home owners considered affordable changed over time, sometimes significantly. Not surprisingly default rates rose and foreclosures hit an all time high; higher, in fact, than it had been for two decades.

Since the mortgage companies could not sell the mortgages to Wall Street investors, who did not want houses in foreclosure, the borrowers found themselves cut off from further funding. The once friendly mortgage companies were now suddenly stricter in their policies.

Although the situation for many homeowners is bordering on desperation, borrowers can find a solution to their financial woes through hard money loans. This is a short-term solution where lenders are willing to loan money based on the property value. The amount loaned is calculated on an LTV ratio, a loan-to-value assessment, and this is around 75 percent.

What the borrower gains through this arrangement is time. This time can be leveraged to prevent foreclosure, giving the lender a few options, like selling, renting, or refinancing the home.

Private lenders make hard money loans. Because they take the risk of a possible loan default, the interest is high, often more than 10 percent. And a second mortgage based on hard money is even higher.

A hard money loan is a viable option if the borrower has an exit plan and the support to fully execute it. This strategy ensures that the loan is paid off and may even result in another loan at a later date.

The Hard Money Team can offer essential information on hard money lending. They can be contacted at 512-692-4195. Call them today for more information. You can also visit their website: www.HardMoneyTeam.com

The first tip is to get references. Trusting someone who calls you on the phone is not wise. Those funding deals should be able to give you references from former clients. Two client references who have closed a loan in the past three months will help you weed out the real lenders from those pretending to be lenders. By getting the name of the title company or the lawyer who closed the loan, you can verify that the loan was an authentic one.

The second tip is to do your own research. You can research through the internet and by calling the Better Business Bureau. You can find out about their registration, their investor licensing, and if they have been blacklisted by borrowers. The better informed you are about the lender, the more likely you are to make a sound decision about them.

The third tip may seem obvious but many people make this mistake–don’t send them money for costs like appraisal fees even after they have sent a letter of intent. A nice website and a professional looking website are not proof of authenticity. You have to be careful.

And the fourth tip is ask many questions. Who is providing the money? Who is writing the check? Who is the private investor or company? How is the money coming to you? Is there a letter that shows proof of funds? If the lender says it is coming from the hedge fund, find out the name and the terms of the hedge fund. Find out all about the lender before getting involved–office, address, contacts, references, proof, and so on.

The Hard Money Team can offer essential information on hard money lending. They can be contacted at 512-692-4195. Call them today for more information. You can also visit their website: www.HardMoneyTeam.com

1. A definition of hard money.

Hard money is a loan that uses real estate as collateral. The usual lending criteria used by banks and traditional lending institutions are not used, allowing someone with poor credit to get this type of loan. The real estate can be land, construction, residential, or commercial. The property is appraised and accepted at collateral if the equity is twenty-five percent.

2. The benefits of hard money.

Hard money is offered at high interest. This is not because the lender is predatory or immoral, but because of the high risk of default. The borrower should not think of this loan as a long term solution to financial problems like an imminent foreclosure of property. Instead, it should be considered a short term solution to hold on to the property and recover money through selling, borrowing, or refinancing on it.

3. The expense of hard money.

On residential real estate, it is 10.5 percent. If it is a second mortgage, the interest rate is even higher, 15 percent. These are rough estimates, and the actual percentage depends on region and the borrower’s equity.

4. Who needs hard money?

Hard money loans are a last resort for many borrowers who may lose their property. A home owner may have his or her house go into foreclosure. A commercial property owner faced with the possibility of having to stop a building project or taking on a partner, may find a hard money loan the best of all possible options.

5. Can hard money lenders be trusted?

Due to the difficulty in getting a loan, not all hard money lenders are genuine. Many charlatans have climbed on the mortgage bandwagon knowing that they are dealing with desperate people. So it is very important to do your due diligence. You must get references from previous clients, do independent research on the lender, and ask a lot of questions. Fees should not be paid upfront until everything is verified.

The Hard Money Team can offer essential information on hard money lending. They can be contacted at 512-692-4195. Call them today for more information. You can also visit their website: www.HardMoneyTeam.com

Given the recent recession, it may be difficult to determine whether one should invest in hard assets to help someone save a home from foreclosure or stop a commercial building project due to lack of funds. It’s often difficult to decide whether an investment is safe when the markets are volatile. An example is government bonds. While they appear to be a safe investment because the amount invested and the partial interest are guaranteed, they are losing their purchasing power.

The truth of the matter is no investments can be completely safe. There is really no such thing as a guaranteed investment. The only reliable rule of thumb is to match the purchasing power of the dollar with the value of the investment. The investment should at least match the expenditure.

Usually the best investments are mixed investments. This is a way of combining investor growth with safety. Over the past seven years, the ROI from emerging markets is stronger than for developed markets.

The ideal solution is to combine stability with growth. Safety comes from diversification. When buying stocks and bonds, you should buy from a variety of sectors of the economy, rather than putting all your eggs in one basket and selecting only a single sector. A good stock portfolio with some astute investments in an emerging industry will be beneficial.

The Hard Money Team can offer essential information on hard money lending. They can be contacted at 512-692-4195. Call them today for more information. You can also visit their website: www.HardMoneyTeam.com

Hard money loans are useful when you need the money right away and feel reasonably confident that your real estate project will be able to pay off the high interest loan and still leave you with a comfortable profit.

An example of a good real estate proposition is getting a hard money loan to buy a rundown house that can be inexpensively renovated to sell well. Deals like these have a lot of competition between investors and need to be seized quickly. While other investors are fumbling with jumping through the hoops created by a banking or lending institution, you can quickly get a hard money loan and secure the deal. This money can suffice not only for the cost of the real estate deal but also reconstruction expenses, too.

Another example is purchasing a bank-owned home. These are usually profitable deals. Quick money is essential to get the property from the bank, and this money can be obtained from a hard money lender without much paperwork. In fact, the lenders can work out a deal with you fast once they know that they will get their money back with interest. It can take as little as a week when the lender knows you’re good for the money. The property once purchased can be renovated and flipped or even sold close to a wholesale price.

The more deals you can find and the faster you can close them, the more successful you will be in real estate. Knowing that hard money loans are available can speed up your cash flow.

The Hard Money Team can offer essential information on hard money lending. They can be contacted at 512-692-4195. Call them today for more information. You can also visit their website: www.HardMoneyTeam.com

A hard money lender provides an HML on a Loan-to-Value (LTV) basis. A real estate property’s value is determined by how much money a lender would get from its sale if the borrower were to default, forcing a foreclosure. HML lenders typically offer cash at an LTV ratio between 65% and 70%, or 65-70% of the current property cash value.

Despite the higher interest rates of hard money loans, many borrowers choose them for several main reasons. First, a borrower’s low credit score, or poor credit rating, has less of an impact on his or her approval for an HML. Second, HMLs have less strict standards than most bank loans, including a lesser need for documentation. Third, the HML approval process is often faster, which is very important to a borrower facing foreclosure, or requiring quick cash for other reasons. Finally, a borrower can use the HML as a “bridge loan” while waiting for other, more long-term financing. All these combined reasons may make an HML the best, or even the only, option for many borrowers today.

However, since HMLs carry higher risk of default than other loans, lenders must protect themselves. Along with requiring a higher interest rate, lenders usually take the first lien on the collateralized property. If the borrower defaults, then the first lean gives the lender the first legal right to the money from the sale of the real estate. This protection is especially important to the lender if the borrower has a lower credit rating, but it may deter a borrower from choosing this type of loan.

The hard money lending business in much more loosely regulated than other types of lending. Many laws pertaining to hard money lending are broad and general. However, there are a few cases where limits on interest rates are set low enough that the risk to the lender outweighs the benefit of doing business in that jurisdiction.

Hard Money is money for any type of real estate transaction that does not conform to traditional banking criteria. They are equity based loans in which borrowers credit score is not taken into consideration. It can be used for Residential, Commercial, Construction or Raw Land. The investor/lender does appraisal and borrowed should have 25% equity. Based on value and equity they can borrow against that. It can be used for foreclosures, defaults, etc. It works for Commercial borrowers that do not meet minimum loan requirements.

2. Is hard money predatory or at the very least not moral?

Residential Hard Money allows borrowers more time, breathing room from foreclosure or defaults. Hard Money is more expensive but is a big risk for the investor/lender.

3. How expensive is this type of mortgage?

Average is Residential- 10.5% and if it is a type of 2nd mortgage is averaged to about 15%. Depending on area of the country and how much equity the borrower has.

4. Why would anybody use hard money for a mortgage?

Hard Money is not a solution for everyone. For example on a Commercial Project- stopped because of no funds- the builder has 3 options 1. Stop the project 2. Take on a partner or 3. Hard Money. Hard Money is less expensive then bringing on a partner.

5. What are the benefits of using this type of product?

For residential borrowers- stops foreclosure, gives time, gives options.

For commercial borrowers- paying the high coupon cost is less expensive then bringing on a partner.

Rosen adds, “Hard money is a lifesaver for many families across the country and it helps people going into foreclosure or default by allowing them time to get their house sold or rented out.

On several measures of economic stress, Texas is doing quite well. The state unemployment rate is 8.2 percent—high, but still one many states would envy. (California’s is 12.5 percent; Michigan’s is 14.1 percent.) It entered recession later than the rest of the country—Texas was adding jobs through August 2008—and started slowly adding jobs again last fall, thanks mostly to its great position in the largely recession-proof energy industry.

The Texas housing market also has fared better than many. The mortgage delinquency rate (the portion of borrowers three months behind on payments) is 5.78 percent, compared with 8.78 nationwide, according to First American CoreLogic. That’s partly because relaxed zoning codes and abundant land kept both price appreciation and speculation down. “House prices didn’t experience a bubble in the same way as the rest of the nation,” said Anil Kumar, senior economist at the Federal Reserve Bank of Dallas. But it’s also because of two attributes not commonly associated with the Longhorn State: financial restraint and comparatively strong regulation. Unlike many of its neighbors, Texas has state laws that prohibited consumers from using home-equity lines of credit to increase borrowing to more than 80 percent of the value of their homes. The upshot: Dallas housing prices have fallen only 7 percent from their 20! 07 peak, according to the Case-Shiller index.

As it has for decades, energy is driving Texas’ economy. But it’s not because the state’s wells are gushing crude. In November 2009, Texas wells produced 1.08 million barrels per day, about half as much as they did in the late 1980s. In recent years, natural gas has been undergoing a renaissance. The state’s production rose about 35 percent between 2004 and 2008. And Texas has received a big boost from a different, renewable source of energy: wind.

In this area, Texas’ size and history of independence has enabled it to jump-start a new industry. The state has its own electricity grid, which is not connected to neighboring states. That has allowed it to move swiftly and decisively in deregulating power markets, building new transmission lines, and pursuing alternative sources. “We can build transmission lines without federal jurisdiction and without consulting other states,” said Paul Sadler, executive director of the Austin-based ! Wind Coalition. Ramping up wind power nationally would require connecting energy fields—the windswept, sparsely populated plains—to population centers on the coasts and in the Midwest. Texas’ grid already connects the plains of West Texas with consumers in Dallas, Austin, San Antonio, and Houston. Texas recently surpassed 10,000 megawatts of capacity, the most by far of any state and enough to power 3 million homes, Sadler says. Wind energy is also powering employment—creating more than 10,000 jobs so far. And it and has attracted foreign companies, including Danish turbine maker Vestas, Spanish renewable-energy giant Iberdrola, and Shell.

Texas today is more suburban engineer than urban cowboy, more Michael Dell than J.R. Ewing. Austin, home to the University of Texas, the state government, and Dell Computer, has a 7 percent unemployment rate. Yes, Exxon Mobil is based in Irving.* But the state’s! energy complex is increasingly focused more on services and technology than on intuition and wildcatting. And it is selling those services into the global oil patch. Russian, Persian Gulf, and African oil developers now come to Houston for equipment, engineering, and software.

While its political leaders may occasionally flirt with secession, Texas thrives on connection. It surpassed California several years ago as the nation’s largest exporting state. Manufactured goods like electronics, chemicals, and machinery account for a bigger chunk of Texas’ exports than petroleum does. In the first two months of 2010, exports of stuff made in Texas rose 24.3 percent, to $29 billion, from 2009. That’s about 10 percent of the nation’s total exports. There are more than 700,000 Texan jobs geared to manufacturing goods for export, according to Patrick Jankowski, vice president of research at the Greater Houston Partnership. “A lot of it is capital goods that the Asian, Latin American, and African [countries] are using to build their economies.”

Thanks to that embrace of globalization, the Texas turnaround may help lead the nation in its economic turnaround. Texans have always had the ability to think big. Now that their state has become a player in the global economy, we can expect a new kind of swagger.

Correction, April 19, 2010: The article originally misidentified Houston as home to the corporate headquarters of Exxon Mobil and Chevron. Exxon Mobil is based in Irving, Texas, and Chevron is based in California. (Click here to return to the corrected sentence.)

Daniel Gross is the Moneybox columnist for Slate and the business columnist f! or Newsweek. You can e-mail him at moneybox@slate.com and follow him on Twitter. His latest book, Dumb Money: How Our Greatest Financial Minds Bankrupted the Nation, has just been published in paperback.

Article URL: http://www.slate.com/id/2250999/
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