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Cash Out Refi: Anyone have info on Private Money Lenders ---Rates, Terms, Points & LTV ??

  • June 25 2012 - Cottonwood-Verde Village
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Answers (5)

Profile picture for user5382536
Sorry about the typo.. Thats $40 K on a $100K property
  • October 31 2012
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Hello , I am looking for a private money lender loan for 40% LTV for an investment property I own outright with no other liens of course . I am looking for a 2 year term . The property is 100% and the funds are being used for a business venture . I have done two other investment loans in the past on this property without a hitch and have references .  Looking for $49K on a $100K property .

Thanks , Joe
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  • October 31 2012
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There is money available for every possible purpose.  Cash-Out Refi's included.  Private money is more expensive, but underwriting terms are more common sense based. A Private lender is not credit driven, so they look at each deal based on the:

1) Borrower – Private Lender looks at financial qualification of borrower.  They want to make sure the borrower can make the payment, and that the loan terms do not qualify as a predatory, but still produce a strong yield. 

2) Property – What sort of asset, (Residential, Commercial, Single Family) and how much equity is left in the property after the loan.  If the borrower fails, the asset must be worth more than the debt. Preferrably a lot more. The lower the LTV, the lower the APR.

3) Exit Strategy – How does the borrower plan to transition from relatively high interest short term private money to longer term lower interest financing?

4) BCause of the Bad Credit – There is bad credit and then there is Bad Credit.  How the borrower got theirs is an issue. Medical and property-based bad debt is subjectively different from credit card, vehicle and toy purchase defaults.

No matter from whom you borrow from one truth remains: the greater
the perceived risk, the higher the interest rate. If your credit is bad, you have to pay more to borrow. 



  • July 15 2012
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Cash Out Refinancing is typically done using bank financing and is favorable in both its terms and rates. Private Money and Hard Money loans are typically more expensive, much more. Due to there expense, Hard Money  and Private Money loans are not typically used for Cash Out refinancing.

The following is an example of a typical hard money loan. Fees would be extra.
 

The rate would be....12% or higher, might be IO (interest only), and would have points. Interest may adjust ,and if so, it may have a  floor and no ceiling/cap.

terms would typically  be... 1-3 years

LTV would be....60-70%

The loan may also include a prepayment penalty.





 
  • June 26 2012
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Profile picture for 203K Alternative
Yes,  I would need to know more details.  Property type?  Are you occupying the property as a primary residence?  What type of term are you interested in? 
  • June 26 2012
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