What you need to know about Private Hard Money Lenders

If you are a private investor and are looking for an alternative form of investment from the conventional stock and bond markets, we have the perfect solution for you. Hard money lending, or HML as we normally abbreviate it is a simpler and stress free way to make your investment. The only thing we require you to do it conduct due diligence before approaching us for help. Here are the things you need to know about us as Private Hard Money Lenders and our services.

Liquidity

In case you are thinking about becoming a private lender, you need to understand the concept of waiting for the maturity date of a loan before thinking about investing the money. While it is true that private lending pays off, most of the times the returns are not paid back as scheduled. Gambling with the loan could therefore lead to losses. Most people say that it is possible to get your invested capital back before loan maturity, and they use online loan exchange programs such to get the money back. However, most of these loans are normally sold at a discount, and this means that you will be losing a lot of money in the process.

Valuation of the collateral

We see many lenders losing money because they were not careful enough with the process of collateral valuation. If you want an accurate estimation of the amount of money an asset will cost, don’t just rely on photos. Take time and visit the location of the asset. You may be shocked at what details you will unearth. In addition to making your own valuation, ensure that you have asked for a second opinion from another professional in the field. In order to properly mitigate the risk, we normally recommend that you look for a broker price opinion or n automated valuation model. We are on manta which will help you avoid offering more money than the asset would fetch if the loan went unpaid.

Attaining the title

The other thing that you need to do is obtain title insurance. This insures your position as the lien holder and also protects you against forged property ownership documents. It is important to note that title insurance is an indemnity policy. This means that you can only be reimbursed for a proven loss and not potential losses. However, this does not mean that you should overlook this step. It is better to have all your bases covered than to lose money in the end.

Looking at the borrower credit

We see many private lenders ignoring issues such as the credit past of the people they are investing with and ending up with losses. While we do not encourage obsessing over the scores, it is important to look at the person’s ability to repay the loan when a balloon payment is due then start the flexible deals in repayment.

What is hard money lending; the benefits

Everyone knows how complicated the process of accessing credit from banks and mortgage lenders is. For people that do not have time for these bureaucracies, or have problems from their financial past that makes their chances of getting credit slim, this is seen as the best way to get some credit. However, it is important to ask questions such as what is hard money lending? What are the benefits of the process? Here are some answers to these and several other questions.

The things hard money lenders do

We are people that specialize in loans that are backed by collateral such as a car or a house or other valuable property. The difference between the loans we offer and the conventional loan is that we directly give the cash to you while the other credit types help you acquire some property. The amount of cash you receive depends on the value of the collateral that you give to us.

The terms and conditions followed by the lenders

We do have several terms that we normally follow when deciding how much cash to loan someone:

  • Value of the asset: The truth of the matter is that when we appraise the asset, we will lend you an amount of money that is about 50-70 percent the value of the item.
  • The interest: Because of the risky nature of the business, and the fact that the loans are short terms, our interest rates will sometimes be a little on the higher side. However, when you compare the service and its accessibility, it is totally worth the cost.
  • The time it takes to repay the money: because our loans do not go into the huge figures, we will normally give you a period of about three months or less to repay the money.

These are a few of the terms and conditions that we follow when we are lending the money. But these should not worry you because we are very flexible. In the services we offer.

The pros and cons of the loans we give

Before getting a service, it is important to weigh its good side and the negatives before making a choice. One of the advantages you get when you get the credit is that you will not waste a lot of time in useless bureaucracies. The second is the fact that you do not waste time looking for guarantors. The third is the fact that even if you have had issues such as bankruptcies and foreclosures in the past, and they have affected your credit score, you will still have a chance to access our credit.

The only thing that is termed as a downside is the short repayment time of our loans. To improve on this,follow us on our youtube video, we have introduced an option where you get the repayment deadlines extended to give you more time to look for money.

Steps followed in giving hard money houston

There is a huge difference between the process followed when getting a conventional loan and the one followed when acquiring a hard cash loan. The loan officer in the conventional bank setting discusses the loan products that are available to you as their client, helps you through the application, gathering information about credit and assets and sending the data to the closing staff. The closing staff is the one who decide whether the loan will be approved or rejected. The hard money houston process is completely different from the conventional. Here are the steps followed by us the lenders.

Creation of the loan package

The first thing you will be needed to do is fill the 1003, or the loan application form. When you have filled out the details, the next step will be looking at your credit report for the past two years, tax returns and bank investment statements among other documents. These will be assessed in order to establish the amount of money that can be offered to you as a loan. At this stage, we may also need you to give us a statement of information or the SI which helps us find out if your property has any liens or judgments against it.

Gathering and reviewing title information

We will try and attain the preliminary title report. This helps us get information from the title company regarding any existing liens, easements, judgments, and other encumbrances against the property. The title company will then an offer to insure the transaction based on the information in the report. In case the information does not allow the title company to insure the transaction, we will come back to you and ask for an alternative property.

 

Provision of disclosures

The federal state offers different types of disclosures depending on the type of loan in question. These disclosures are supposed to provide the person borrowing the loan key information about the loan. The disclosure will protect you as the borrower from getting a loan whose terms and conditions might harm your credit further. The most important thing during this step is to fill in accurate information about the type of loan that you have applied for so that you can get the right information if you are in need of urgent cash.

Ordering and reviewing the appraisal

If you as the client are comfortable with the information contained in the disclosure, we will move to the next step, which is ordering an appraisal to the property. The main aim of getting the appraisal done is to ensure that the value of the underlying collateral matches up to the amount of money applied for. We like carrying out this process ourselves because it gives us an opportunity to save you from a poor investment decision.

Underwriting and loan approval

When we have looked at your criteria and documents, we will underwrite and approve the loan application. The loan documents will be signed by a notary and you will receive the money from houston lending services.

Hard money lenders Houston; Asset Appraisal for the Loan

In the world of formal banking, the only way to determine the value of a loan is getting an appraiser to do it. This happens because loan officers and other bankers have tons of loans to process and they do not have time and the skills needed to evaluate all types of collateral. As a result, borrowers face limitation when it comes to the amount of money they can access from these lending institutions. The good thing about houston hard money lenders  is that we have specialists in asset appraisal, and we are more flexible on the types of collateral that can be used to determine loan value. Here are tips we would like to share with you about asset appraisal.

The concept of multiple points of value

We recommend that you get different points of value that do not give one value estimate. The following are reference points that you can use:

    • Appraisals: this is a value report that is given by a licensed appraiser. The information it contains includes sold, pending and active comparable properties, photographs of the property, data and other analysis to support the estimated value of the property.
    • Broker Price Opinion: This is normally simply referred to as a BPO. It is a shorter report than that of an appraisal. If you decide to use a BPO, it is important to make sure that the broker himself views and photographs the property as opposed to them sending someone to do it, as it often happens when they are too busy. Note that when a third party looks at the property, it defeats the entire purpose of getting the valuation done in the first place.
    • Personal drive-by: We normally refer to this tactic as driving the comps. Instead of relying solely on what other people say about the property, take time and go down there to have a look at it. The best opinion you can get of any property is your own judgment. Interact with others people such as brokers, owners of the neighboring property and other people around the property. You will be surprised by how much you can actually learn from these people.

  • Looking out for the negatives: there are negative attributes to a property that can adversely affect its value. The negatives are different depending on the type of collateral. When performing an appraisal, it is common to deduct some amount of money from the best dollar value of the property in order to compensate for the negatives. However, note that the negative feature does lower the value of the property and make it less marketable in the future.

Issues that are normally considered as negative factors include the location of the house whereby if the surroundings have issues like high crime rates, value is affected. Lack of access is also another common negative.Follow us on Facebook to get more tips on hard money lenders in houston tx.