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Private money lendersPrivate money is a short to medium term loan usually for 1 to 6 years that is used for all types of secured real estate financing. The property may be a single family home or any other facility like industrial or agricultural land or construction or commercial or retail establishments. The private money lenders rates range from 10% to 15% usually. The rates vary depending upon the condition of property, the real equity contributed by the borrower and other things like LTV ratio.
The fees involved
The fee is normally 5 per cent of the gross loan amount. The document preparation fee is 500 dollars and the property inspection fee is another 500 dollars. A proportionate collection account set up fee is also charged based on the loan amount. There are no other hidden fees. The fees can be paid from the proceeds of the loan, if there is enough equity in the property.
The factors
There is a special clause of minimum interest of 3 to 6 months. Penalty will not be charged for repayments made within this period. This loan includes high rates because they are immediate and temporary. A profitable transaction cannot wait for the conventional loan as they come with long procedures and rigid conditions. It is a better option to use private money for closing the profitable deal rather than losing the deal itself. There are some special flexible clauses like the real value of the property is considered for determining the loan amount and not its purchase price. Properties like land are not considered by regular lenders for financing. But the private lenders make loans available to such properties as they consider the property type as one of the factors to decide the eligibility for a loan.
It is therefore possible that 100 percent of the value of the property is financed. The structure of the property is considered a factor for financing. The private money lenders often allow the borrower to build equity in the property which cannot be expected from banks. These are some of the advantages of going for a private loan. But there are many such feasible clauses which allow the borrower to clinch property deals. The private money is useful in cases like construction and rehabilitation etc. Normally the private loans are closed within one or two days but typically in one or two weeks. The parties concerned like the broker, the borrower and others must also act swiftly to quicken the process. The critical part of the private money loan is evidence of value of the property. A good appraisal is very important and so the lenders themselves give some detailed description of how a proper value analysis should is done.
Most of the borrowers are professional investors and they are the best qualified to do value analysis.
The private money lenders loans are not the loans that are easily processed through a set of guidelines or definite rules. These real estate backed loans are made considering many factors which is ultimately a peoples process. The use of a lot of common sense makes the private money the best option to the investors. So much of humane thinking goes into niche lending that it cannot be automated. The high cost is compensated amply with the quick and big profits earned through immediate closing of the deal which cannot be expected with the conventional loans. The following are some private money lenders who function the best in US.
Fairfield Financial
Fairfield Financial Services, Inc. has been in business since 1964 in the Pacific Northwest. They have expanded to Alaska, Colorado, Idaho, Georgia and other states providing hard money loans. These loans are a good alternative to traditional loans for those who invest in property and on real estate projects. They specialize in offering private loans to borrowers as well as investors through professionalism and relationship building.
The first step is to call Fairfield Financial and discuss about the loan. Other ways are to use email or the online form with exact details about the deal. If they feel the details acceptable, they would proceed further.
The complete loan packet should be sent by mail and not by fax.
A deposit of 500 dollars should be made by the borrower by cashiers check or money order. A conditional loan approval is given to the applicant at this stage.
If the property deal is clinched, they complete the documentation and the loan closing will be carried out through escrow.
The deposit is a fee for processing the loan and if the loan doesnt come through because of their shortcomings, the deposit amount will be returned to the borrower. Otherwise it will not be refunded.
ZDE Investments
ZDE is a private money lenders in Chicago. The private loans are generally called Hard Money. They are not based on the creditworthiness of the borrower, and the property treated as the collateral security nor have the usual stringent rules that are followed in institutional loans. The private loans are used when there is less time and cannot fulfill all the usual formalities. These loans are usually taken to clinch a hot real estate deal. So the cost is not considered as important as availability and timing of the availability of funds. It is a prudent investment strategy. When a property under foreclosure is offered for sale, there may not be enough time for institutional underwriting procedures to be carried out to close the deal. Private money lenders act swiftly to make available the funds needed to complete the transaction. The loans are made using the primary property as the collateral. But it does not require you to furnish W-2s or financial statements and income tax returns to apply for this loan. The stated income and the repaying capacity that is based on the project and the property deal concerned are the main criteria for eligibility. The loans are quickly accessible to purchase, repair or resell properties in Illinois. There are no initial down payment or prepayment penalties for these loans.
Private Loan Funding Corp.
Private Loan Funding Corp. is a family based Private Loan company based in Southern California. They have over 40 years of industry experience in resolving and avoiding foreclosures. They respond quickly and provide the private financing after viewing the transaction and considering all the special circumstances to offer the best solution.
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