 itsdk7
Joined: 05 Nov 2009
Posts: 2
2.00 Dollars($)
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 Posted: Thu Nov 05, 2009 3:51 pm Post subject: Can I qualify for a Hard Money loan? |
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This is a second question to my original question of “How do I locate a reputable Hard Money lender?”
Since I am self employed and my travel business has taken a huge hit during the last 2 years (in the Los Angeles, California area), I now want to go back to school for about 1 year and start a new & different career. Yet from looking at some of the “hard money” lender online loan applications, I see that they want to know how I will pay back my loan. Yet I am rather stumped on how to best answer this question, because if all goes well, I hope to have a steady income again in the next 2 to 2 ½ years (I figure), yet I figure with my current savings and a hard money loan, I will be financially okay for the next 3 years at least. Yet how would I best answer this question?
Also, are “hard money” loans easy to get, as long as I have at least 150K of available non-mortgage equity in my house (based on the current market value of my house (in my case), even with my existing mortgage)? Do I have to provide previous income documentation, since my income has bit the dust the past 2 years? In my case, my credit is good (a FICO score of 733), and I do not have any lates or past due accounts on my credit report. Would I be able to still get a hard money loan as a “no doc” or “stated income” in todays financial climate? Based on so much I have read, it seems that hard money lenders just want to know that there is enough equity in the property in order to consider the loan, yet they do not care about past credit or income. Is this “still” true today?
What are the typical terms for Hard Money loans (i.e. 1 to 3 years or 5 years or 15 years or 30 years)?
Are Hard Money loans typically interest only with one final balloon payment (where I would have to pay back the entire principle) at the end?
Since the hard money loan would be a second mortgage (I guess), is there anything I could do to jeopardize my house, by signing a contact with a hard money lender? As I often see so many times in the local news of people somehow inadvertently signing away their homes to so many shady companies out there. Yet I figure since I have a solid 1st mortgage, I am guessing that there is almost absolutely no way I could accidentally sign away my home, since my bank (who holds the 1st mortgage) would make it almost impossible for me to sign my house away to anyone (even if I wanted to) without the 1st mortgage being 100% fully paid off?
Can someone here help and advise me? Thank you.
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Niicss
Joined: 03 Oct 2005
Posts: 2620
Location: New Jersey
409.63 Dollars($)
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| Posted: Fri Nov 06, 2009 3:28 am Post subject: |
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Hard money loans are high interest loans which are similar to bridge loans. These loans are mainly made by the private investors. The loan to value ratio required for hard money loans is around 60-70%. The hard money term period may vary from lender to lender and it would be mentioned in your loan agreement. In order to avoid scams and shady companies, your best bet would be research about the companies. You may also check out with your friends and relatives to know about lenders giving hard money loans. If they have dealt with such a lender, they would be able to let you know whether or not the company has a good reputation.
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Good is the Enemy of Great. |
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