Frequently Asked Questions
Do you have questions? We can help! You will find the answers to several frequently asked mortgage questions below.
Aren’t Private Money Lenders / Brokers “Suspicious”?
In the past there have been unscrupulous players in the Private / Hard Money Lending Field. Like any business, Private / Hard Money have had its good and bad players but as the business has matured, many of the bad lenders have been driven out of the business. Now there are many more good than bad lenders. The answer is knowing how to find the good lenders and the questions to ask in performing your due diligence. Over the years there have been many new “private money lenders” emerging who are well-trained professionals acting in the best interest of borrowers and investors alike. Our industry has changed significantly over the last 20 years and caring professionals have emerged who pride themselves on serving as a conduit between private money investors and borrowers seeking funds for real estate projects such as rehabs, bridge loans, commercial lending, land loans, construction loans and more.
What questions should I ask a Private Money Lender?
One of the best questions to ask is how long have you been in business? ExpressLoan has been in business since 1997 and the President / Broker, Brent Calver has been in the lending industry since 1984. Another good idea is check with the licensing authority to see if there are or have been any action or complaints about the lender’s activities. ExpressLoan and most CA Private Money Lenders are licensed by the CA Dept of Real Estate, Our License # 01227543. You can click this link to see our license information http://www2.dre.ca.gov/PublicASP/pplinfo.asp?start=1 . Generally, you want to ask as many questions as it takes to become comfortable with the honesty and integrity of the lender.
Where does Private Money come from?
As the name implies, the funds come from private investors who are looking to make hard money loans. These sources range from a single individual investor to a group of private investors who each fractionally invest in your hard money real estate loan, even a group of private investors who have already pooled their funds and rely on a professional hard money loan broker such as ExpressLoan, to fund loans to qualified borrowers.
Is Private/Hard Money expensive? If so, why?
In general, private/hard money loans are more expensive for a few reasons:
- The investor is looking for a greater return than they can get in the bond market or in a savings account.
- The investor is looking for safer returns than the stock market.
- Higher risk = higher rate. So a 20% loan-to-value (LTV) loan on a fully rented commercial building would be far less risky than a residential rehab loan on a 65% LTV fixer bought at a distress foreclosure sale.
- Private Money Brokers must invest time in generating and developing a solid loan and then secure the investor willing to accept the risk.
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Isn't Hard Money only for desperate borrowers?
No. We get many loan requests that simply don’t fit the conventional lending mold. Hard money loans are just another means of financing these transactions. Bridge loans, land loans, and hard money residential rehab loans and today, construction loans are all examples of difficult loans to get from a bank.
I heard that these lenders want to take my property!
Not true, most private money lenders have no desire to take your property. Recent changes in lending laws also require that the lender/broker have a reasonable belief, other than the properties equity, that the borrower will be able to repay the debt. Additionally, we derive a portion of our livelihood by servicing your loan on behalf of our investor. If they take your property, the income stream of ½ to 1% of the loan amount per year stops so our incentive is to keep you in the property, not take it.
Where will I make my payments?
In most cases you make your payments directly to ExpressLoan. In some cases you may be asked to send your payments to a separate servicing company, if directed to do so by your individual private investor and in some cases directly to the individual private money lender. When ExpressLoan services your loan, you receive regular monthly statements, a yearly accounting of your loan, your 1098 for interest paid during the year and a local and toll free phone number directly to our servicing site.
Okay, so how long does the process take?
At ExpressLoan you will often have an answer the same day. On more complicated transactions we may have to have a full and complete loan package before we can give you an answer. Either way, once we have a full picture of the loan request, it is rarely more than 24 hours to make a loan decision. And we can usually fund your approved loan in 7 to 10 business days!
What is the difference between pre-approval and pre-qualification?
When does it make sense to refinance?
What is the difference between a mortgage broker and a lender?
Will I save money going directly to a mortgage lender?
What is a full documented loan?
What are the other types of loans?
What is a good faith estimate?
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DRE 01227543 (NMLS# 249555) | Phone: 760-634-4545 | 800-635-6222 | Fax: 760-274-6797
ExpressLoan.com, Inc | 1463 Paseo De Las Flores, Encinitas, California 92024
