WHY PRIVATE, HARD MONEY?
Why would anyone need private hard money? Yes, the interest rates are certainly higher than conventional loan terms, but there are many reasons a borrower might consider paying a higher interest rate and/or higher up-front fees. A borrower might want to gain access to capital more quickly and prefers not to or cannot provide all of the numerous documentation often required by institutional lenders. Borrowers might need to find capital to pursue an opportunity that banks will not finance, either because they are unwilling or unable to do so.
Private money underwriting is less stringent than the full documentation and income requirements of today’s conventional loans. Most private lenders do not expect perfect credit and spend less time scrutinizing the borrower’s personal financial situation compared to the institutional lender. Underwriting decisions focus on the merits of the specific deal under consideration, whereas banks require both strong collateral and usually excellent credit and cash flow from the borrower. Private, hard money loans are commonly sought out because of the opportunity for quick, substantial profit (or savings), making the cost of interest and origination fees small by comparison. Sometimes private money is simply the best financing solution.
WHEN DOES IT MAKE SENSE TO USE A HARD MONEY LOAN?
Situations where private money loans for a borrower make the most sense include:
- A fast closing is required and banks cannot meet the deadline
- A buyer lacks verifiable income or does not want the hassle of all of the documentation required by an institutional lender
- Money is needed quickly to pay off an existing maturing bank or private note
- Buyer lacks sufficient credit or cash flow or seasoning of funds to qualify for a conventional loan
- Cash-out funds are needed from an existing property for business or investment purpose
- Money is needed to cure a foreclosure and provide time to sell the property
- Borrower only needs the money for a short period of time
- The heir of an inherited property needs money to buy out the siblings
- There are more good opportunities for a smart investor than he has cash
- Borrower has been in business for less than two years
- A borrower needs an opportunity to rebuild their credit and obtain the money needed
WHAT TYPES OF PROPERTIES DOES PRIVATE FINANCIAL, INC. FINANCE?
Our programs focus primarily on single family, non-owner occupied, non-consumer residential properties (1-4 units), 5+ units apartment rentals and small commercial properties in California.
As an equity-based lender, Private Financial, Inc. provides financing based on the property’s equity and borrower’s ability to repay the loan. A borrower needs a minimum of 35% equity in their property. If there is not enough equity, we may be able to cross collateralize the loan with another property that the borrower owns. Private Financial, Inc. provides fast financing solutions for borrowers who have financial challenges and are in need of fast creative financing solutions. We are able to provide a fast decision and, therefore, close your loan quickly.
WHAT DO I NEED TO GET STARTED ON MY LOAN APPLICATION?
We require a minimum of paperwork. An application, appraisal, credit report and photo identification may be all that is needed.
Our underwriting philosophy is that we will consider any loan scenario that is solid and makes sense. It is a philosophy of good common sense. We look at the borrower’s equity in the property, the quality of the property and the ability to repay the loan. More importantly, we listen to the story behind the loan. We deal with people that have many different goals, and we try to come up with a solution that will work for everyone involved.
There are numerous factors that determine what your interest rate will be, such as property type, loan-to-value, term of the loan and various other factors; therefore, we do not quote interest rates on our website. We have found that “one size does not fit all” when it comes to hard money interest rates. When a private hard money lender quotes an interest rate prior to receiving all of the relevant information, chances are very likely that it will not be accurate. We would like to be able to quote you accurately from the start. In today’s market we try to remain competitive and offer the best rates we can for each individual’s situation. We specialize in tailoring the best loan product for each particular loan scenario and providing exceptional service with fast and easy funding.