Real Estate Blog - Myths About Hard Money / Private Money in Florida

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Myths About Hard Money / Private Money in Florida

As a Licensed Mortgage Broker in South Florida (Palm Beach Gardens) I work with several wholesale Lenders from A+ Credit to those who have a few speed bumps along the way of life (as do most Brokers). With the market the way it is in Florida I have really expanded my product line on the Hard Money / Private money side. Since doing this, I have also found many clients and Realtors really have miss information on these type of loans now.

Myth 1:

Hard Money / Private Money Only Uses the Appraised Value and Not the Purchase Price

WRONG!

When the market was going crazy this was a true statement. Now with the market the way it is they use the purchase price. Lets face facts if the appraisal says $300,000 and your buying it for $200,000.. that is really what the value is. You will NOT BE getting a 100% financing using this type of Financing. Those days are gone..

Myth 2:

Credit is Not Looked At

WRONG!

Your credit is looked however, your score is not what is important on the credit report. They want to see your payment history. In the end it will show what your final rate will become

Myth 3:

Close in Under a Week

WRONG!

While this is really not impossible it is highly unlikely. If a complete file is submitted to a Hard Money / Private Money Investor than you it might be able to. However, be realistic. These Investors DO NOT WANT this property. They want you to make the payments. They all now more than ever really go through each file with a fine tooth comb. In the end they do close pretty quick from start to finish.

Myth 4:

My Loan is NOT a High Risk Loan

WRONG!

The bottom line is, if your loan was not a High Risk Loan then you would seek other financing options. This type of financing does not come cheap. Their is a cost to this money.

In closing, I hope I was able to clear up some myths about Hard Money / Private Money lending. If you seek this type of financing please make sure you are dealing with someone who is licensed and really has the knowledge and ability to close your loan. If someone promises you the moon and the stars... RUN!

For more Mortgage Advice: Mortgage Advice in South Florida

Posted by Matthew J Blum - MyFavoriteMortgage.net on 06/13/2008 06:11 AM

Comments (19)

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19 Comments on Myths About Hard Money / Private Money in Florida

JUN

2008

Good information. Mosy of us not in the mortgage business wouldn't know that. Although I never thought credit wasn't looked at...

MB,

With Shaq now in the hard money lending I believe it`s more acceptable now than ever before to seek alternatives to PML...

"Shaq told the Sentinel on Tuesday that he wants to help some of Central Florida's financially hamstrung homeowners save their homes from foreclosure, among other real-estate development projects."

It`s a whole new world!

Gary, You would be surprised at how many people believe they don't look at credit.

Scott, I am very sure get the double digits return on his investment had nothing to do with helping people..lol

MB,

Shaq`s just "helping" it`s kinda gangsta in my opinion....What do i know,.....

Scott, No comment..:-) These type loans really get a great return for the investors money and lets face facts this is why he is doing this. If not can I assume the rate would be in the 6's.. yeah right.... I think not.

Matt,

Would you consider it like an equity line of credit? If so .....my client close in a week with his bank about 6 months ago when the market was already down.

Thanks for the info..i have heard a lot about it but this all makes sense

Neal, 6 months ago is ancient... however, you answered your own question. Your client went to their bank. The bank has access to see the person regular deposit (verfied funds which these loans are not) and I am sure your client had excellent credit. So really what is the risk when it came to your client. These are high risk loans.

Michael, My pleasure.. You would think they are common sense but yet....lol

thank you. . I guess that's why they called hard!

The other myth is , the probability that you will keep your house with this type of loan is high !!1 Now they were in trouble to begin with I know

Hi Matt,

I love that every time I read your blog I learn something new, excellent information! :)

Fernando, lol.. I guess so.. thank you for your comment.

Charlie, I would have to dissagree with you. At least in Florida. These investors don't want the your property they want your money..now of course their is a higher rate of of foreclosure of course. but they make money on the amount of fee's and interest rates they charge

Suzanne,...Aww<blush>.. ty

Hi Matthew. Good info my friend. Hard money is great for Investors who only plan on having the property for a few months. I just had a call the other day from a new "investor" who was looking for a property priced 50% below value so he could borrow 80% of appraisal in hard money and use the overage to rehab. Of course he had never done this before, had terrible credit, had NO money and stayed up late every night watching too much TV. I sent him over to Century 21. :)

Bryant, That is funny it sounds like one of my phone calls lately..lol Thank you for stopping by

JUN

2008

hey mathew good information yaar recentlu i used to get some wrong calls and some missed calls when comparing to it it is ok

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jeanpotts

floridadrugrehab

There is plenty of opportunity if you have the financial wherewithall to make it happen and make good investment decisions. Some will, some won't, next!

JUN

2008

Very true some will and some won't

APR

have any private funds to purchase REO's?

no credit check.........

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