When some people call me, often times they are looking for a couple thousand dollars until their next pay check. We don’t do those types of hard money loans. I believe they are called payday loans.
We do hard money real estate loans for all of California. When people get turned down by a conventional mortgage or they do not qualify for an FHA loan, they start to wonder if they will ever be able to buy a piece of California real estate. They either couldn’t qualify because their income wasn’t high enough in relation to their debts, (debt to income ratio or DTI) or they didn’t have the proper credit. It is usually one of those two that allows them to not qualify.
With a hard money loan, in the case of a purchase, you have to have a sufficient down payment. It doesn’t matter what your credit is or your debt to income ratio, we know that you are not going to walk away from a property after putting 25-30% down.
If you already own an existing property and you want to get a loan on it, you need to have sufficient equity. We call that a cash out re-finance. Sometimes we give them an entire new first or often times we can give them a 2nd mortgage and have them keep that low interest rate first. Many hard money lenders do not do second mortgages.
Oct 1 of 2015, the lending laws of the US just got a little more strict with disclosures and items that will delay closings for conventional loans. These new requirements may push the borrower towards hard money even more than before. Private money, also known as hard money continues to be a nice alternative and good secondary option for the home buyer or the re-financing of an existing home.
So there it is, you should have equity if you need a cash out re-finance or have a down payment if it’s a purchase. Just because it is called hard money, that doesn’t mean it is “hard” to get it. It’s actually just the opposite. For more info, go to www.cahardmoneynow.com