Can I qualify for a Hard Money loan?

[WestCoastWilson]

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.

Wilson

[Toby Lane]

I noticed there is a new member in the introduction section named "hardmoneyloans", maybe he can help you with your hard money questions.

[WestCoastWilson]

Thank you Toby.

Wilson

[WestCoastWilson]

Thank you Jasikazensis. I greatly appreciate you taking the time to provide me a very good and detailed answer to my question.

Thank you so very much.

Wilson

[WestCoastWilson]

alyna has just replied to a thread you have subscribed to entitled - Can I qualify for a Hard Money loan? - in the Mortgage Information forum of Real Estate Forum - Realtor Forums.

"hi wilson,

I am a new member here, got to joined in just today,
I just hope I can be of any help.
When money is discussed between investors, it is considered to either be "soft" or "hard". Typically soft money is easier to qualify for and the terms are flexible. Hard money, on the other hand, is just the opposite. It is much more restrictive. Not in that it's more difficult to obtain, but the terms are very specific and much more strict. They have to be, because most hard money comes from private individuals with a great deal of money on hand. This is why hard money is also referred to as "private money". The money used for investment purposes comes from people, just like you and I, not a typical lending institution. So their first priority is to protect their investment capital. This is why the terms have to be so strict. If it were your money, you would want the same."

Thank you Alyna. I appreciate you taking the time to provide a detailed answer. It was very informative and educational. Thanks so very much.

Wilson

[WestCoastWilson]

Optimus has just replied to a thread you have subscribed to entitled - Can I qualify for a Hard Money loan? - in the Mortgage Information forum of Real Estate Forum - Realtor Forums.

"the information you give is very nice i also knows everything that i qualify for hard money loan. thanks"

You are welcome Optimus. I am glad this information was able to help you, and I hope that it can help others out there in need of insight to hard money loans.

Wilson

[WestCoastWilson]

Glazer has just replied to a thread you have subscribed to entitled - Can I qualify for a Hard Money loan? - in the Mortgage Information forum of Real Estate Forum - Realtor Forums.

"If you are sure that the projected cash flows of your real estate project would be capable of paying for the loan. In fact, a certain safety factor should be incorporated in the event that the expected amount of cash flow does not materialize. The final step is to work on the construction contracts, building permits and other documents that would be needed for conventional loans so that you can avoid the high interest rates in the future."

Thank you Glazer. I appreciate the suggestions and help.

Wilson

[WestCoastWilson]

MikeRoger has just replied to a thread you have subscribed to entitled - Can I qualify for a Hard Money loan? - in the Mortgage Information forum of Real Estate Forum - Realtor Forums.

"I don't see any problem in getting a loan for you,as your credit is pretty good.Moreover take your credit report online,financial assets you have,makes you strong enough to qualify."

Thank you MikeRoger. I appreciate your input and help to my question that I had posted on November 05, 2009.

Wilson

[shack]

Your chances to qualify for a hard money loan varies from lender to lender. If the collateral you present is not sufficient to secure the loan, you may have to add-in some of your personal assets. As this is a potentially risky business for the lender given that his/her 'private money' is on the line, hard money loans also carry higher interest rates than traditional subprime loans.

[WestCoastWilson]

Hello Shack. Thank you very much for your input and help on my question that I posted over a year ago. I can not believe that people are still keeping my posting alive after so very long:-)

During the past year, I was able to get financial help from my family. Plus I was able to get a part-time job in November of last year, which has helped my financial situation. However upon reading so many great and helpful postings about hard money loans since my November 05, 2009 posting, I have decided that a hard money loan is something I am no longer interested in getting.

Thank you Everyone who took the time to read and help me on this issue, I really learned so much and greatly appreciated all of the help. Most of all, I hope that this posting and the answers is able to help someone else in my situation.

At this point, this will be my last comments to this posting, since with the help & contributions that various group members have posted, it resolves all of my issues on this subject, and I no longer need any further help or assistance on this issue. Yet if anyone else wishes to add any further input, comments, suggestions, please do. That way, if someone else reads this posting, I hope that both the new and old contributions will help someone out there.

Thanks a MILLION Everyone!!! : - )

Wilson