FAQ

Q: When are private investor / hard money loans used?
A: The most common situations that a person will require a private investor / hard money loan is as follows: Recent Bankruptcy.  Balloon payment on existing loan is due now. Cannot verify income, tax returns, bank statements, etc. Need emergency cash quickly. Odd or non-conforming types of properties, such as mixed use, multiple units, apartments, land, etc.

Q: Why would a person invest in a hard money loan?
A: Most private investors understand the real estate market, real estate loans and mortgages and are looking for a safe and secure investment with a return better than what they will receive from the bank. Since this types of mortgages are secured by a property with normally 30%- 50% equity, the investor is well protected and receives the benefit of the higher interest rate return.

Q: Are most private investors / hard money lenders trying to foreclose on your home to get the property?
A: No. Private investors / hard money lenders simply want a good return on their investment but they will protect themselves from losing the investment by using the equity in the property. This is a common misconception, private investors / hard money lenders just want the payments made on time but if the borrower is having difficulty they will insure that it will not be a long term problem.

Q: Do I need to provide all my documentation regarding income, bills, etc?
A: This is dependent from investor to investor but typically you will only need to provide minimum documentation to obtain the loan. Also these types of loans are a true no income qualifier loan because you do not need to sign a 4506  or 8821 form.

Q: What if I am a home buyer with damaged or poor credit with a low FICO score?
A: These types of loan are usually used by individuals with past, recent, or current credit issues to rebuild their credit and eventually refinance to a more traditional type loan. FICO scores are no reviewed or required for this type of loan.

Q: As a Mortgage Broker / Banker, can I obtain a private investor loan for my borrower and still receive a commission?
A: Yes, in fact, most loans funded by private investors where originally originated and packaged by a mortgage broker or banker who earned a commission from a loan that they could not previously close with traditional wholesale lenders and investors.

 

 

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