Not-So-Private Facts of Private Money

Mortgage and Lending with Tailwinds Mortgage NMLS 1105200 NMLS 1185934

       With growing disbelief in the possible positive outcomes of private money, it may be necessary to debunk a few common misconceptions in the hope of providing for a better understanding of such loans.


  1. Hard money is a perfectly legal practice; because the investors on these loans are often individuals or companies with plenty of cash, they often do not need as much documentation to support the file.


  2. The loan-to-value ratio can often go up to 80%, in some cases, perhaps higher.


  3. Credit is not needed but if a history is available and scores are in good condition, they can contribute as "compensating factors" to loan qualification.


  4. Terms up to 30 years are available.


  5. Minimum loan amounts can stretch to $25,000 or sometimes, even less.


  6. Interest rates are typically higher than on conventional products; read here to see how the interest rate might not much effect the monthly payment.Interest Rate


  7. Debt-to-income rations are generally restricted to 43% but can often be expanded with compensating factors.


  8. Borrowers may submit 24 months of personal (or business, if self-employed) bank statements instead of tax returns if they are unable to qualify with such.


  9. Obtaining private money funding will not affect the borrower's ability to refinance into a conforming product at any time in the future.


  10. Closing times are often equal to that of a conventional product, if not shorter.


       Hard money loans are not to be feared; they are easier to obtain and generally easier to work with than conforming products.  Private funding is a highly flexible alternative to traditional mortgages and can be tailored to everyday people; it is not just for cash-handy investors, regular borrowers are now able to finance the home of their dreams without cookie-cutter scenarios required for conventional loans. 

Posted by

Tailwinds Mortgage


Rachel Khoury

Colorado Mortgage Broker

(720) 270-4324

NMLS 1105200 | NMLS 1185934 

Comments (4)

Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Rachel, good info about hard money - as you pointed out, they are more 'expensive'!

Jun 30, 2014 02:44 PM
Steven Steele

I have had alot of success with hard money loans in years past. Its an excellent alternative for borrowers who cannot qualify for conforming or goverment loans. Great post, Rachel.

Jun 30, 2014 02:44 PM
Rachel Khoury
Tailwinds Mortgage - Highlands Ranch, CO
Your Wingwoman for Colorado Mortgages


Thanks for reading!  On paper, they look more expensive but depending on the scenario, the monthly payment on a hard money loan could only be a few dollars different than would be on a conforming loan.  It's funny how interest rates work!



Thanks for reading!  Hard money loans are actually fun to do sometimes because of the nature of their success!

Jun 30, 2014 02:48 PM
Jeff Jensen
The Federal Savings Bank/Lending in 50 states - Greenwich, CT

The problem is they typically are considered high cost loans.

Jul 07, 2014 07:37 AM