Some economists are predicting that the housing crisis is nearing it's bottom. This is great news for not only the US economy but also the economies of the rest of the world as well.
What this also means is that profit takers are looking to get in before the doors slam shut on a historic buying opportunity in not only Florida but the entire U.S. One of the main reasons that the financial downturn has lasted this long is because banks and other conventional lending sources have all but forgotten about the real estate investors. Last year conforming lenders implemented a guideline stating that anyone with more than four properties financed is no longer eligible for conforming financing. It doesn't matter how much money you make or how good your credit is, banks WILL NOT lend to investors with more than four properties. This has left many investors stuck between a rock and a hard place.
Investors realize that now is the time to be buying properties. Most investors are picking up REO properties for pennies on the dollar however a huge percentage of these investors don't have enough capital to purchase these properties cash.
Hard Money Lenders Filling The Gap
This is where florida hard money lenders have become critical in the recovery process. Private investors don't have to follow conforming guidelines (currently, although the government has new laws going into effect in October that willl effectively kill the private money industry for owner occupied properties) and are able to extend financing to investors looking to purchase or even to refinance their current properties in order to bolster their investing funds available to them. Hard money loans allow for up to 70% loan to value on refinances of properties that are free and clear or have a lower loan amount to payoff. This is allowing investors to help soak up the excess housing inventory.
Hard money lending is now in huge demand despite it's downfalls. Even though hard money loans carry a higher interest rate (typically 8.99%-12%) investors can still realize huge profits with the assistance of thes private sources of funds for hard money lending. Hard money loans can be short term (12 months) to fully amortized 30 year fixed loans depending on the needs of the hard money client. Many mortgage companies find themsevles unable to compete in this market because they are so focused on cranking out the FHA loans which are so popular today. We have found it a boon to not only our business to but to our clients to offer another backup solution in case conventional, VA, or FHA financing falls through or if guidelines don't permit.
Florida hard money loans are not for everyone, but there can be no doubt that the hard money lending market is integral to finding our way out of the current financial markets we find ourselves in. For more information about hard money loans please viit our hard money loans webpage.
Read our full florida hard money article.
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