This came from a web post by graywolf_357@yahoo.com
Real Hard Money
I have received numerous calls, e-mails and even letters asking what the real deal on hard-money lenders is. At the heart of all these inquires is basically one question. That question is how one can tell the difference between a real hard money lender and a non-conforming sub-prim lender that is claiming to be a hard money lender to justify charging 8 to 12 points up front and 14% to 18% interest. This is an easy one. OK here it is plan and simple and don't let anyone try to tell you different. Please understand my position on non-conforming sub-prim lenders, I think they are great. I get all my hard to place loans done through these lenders;
however, this is not to suggest that a sub-prim lender has the ability to make a hard money loan.
The following are things that a real hard-money lender will NOT ask you for:
1) Hard-money lender will not ask you what your credit score is, he
does not care one bit.
2) Financial statements.
3) Tax returns.
4) Will never ask you to jump through hoops.
Now what he will ask you for is simply this.
1) LTV 65% max.
2) Appraisal subject to completion.
3) First lean holder's position.
4) Exit strategy
If you can provide these simple things you can get a real hard money loan.
No doubt this type of loan will cost you the big points up front some can be as high as 8-12% and a heavy rate of 14-18% or more. In many cases the lender will finance the points.
Often times the lender will allow you to repay the loan when you sell the house or refinance. I hope this answers some of your questions.
For more information on this subject and others as they relate to real estate investing join us at:
http://finance.groups.yahoo.com/group/CREI-Alliance/