Why Borrowers need Private Money Loans

Private Money Loans (sometimes referred to as Hard Money Loans) are needed when a borrower and / or a property fall outside underwriting guidelines of conventional sources such as banks, life insurance companies and conduits. The primary credit decision of those types of lenders is based upon the borrowers credit and income. Therefore, a loan may be a very prudent transaction from a lending perspective, but is classified as subprime, thereby, requiring private money loans. 

Private money loans are often used under the following circumstances:

1. Quick funding for time sensitive loans.

2. Loss of bank loans, for any reason, including, declines and excessive conditions.

3. Borrower’s election to avoid the long hassle, of processing a bank or institutional loan.

4. Our ability to secure larger loans and with more flexible terms than most banks.

5. Short term bridge loans (90 days to 1 year).

6. Property purchased with a large percent of down payment in the form of seller carry back financing.

7. Ground up construction.

8. Borrower has the opportunity to make an investment using the equity in his/her real estate. Crossed collateral / both properties.

9. Borrower has circumstances making it difficult to obtain a bank loan, including but not limited to:

a) Complex financing structures (LLC’s, Partnerships, Trusts & Corporations). 
b) Credit Problems (minor to moderate).
c) Tax Liens (Federal & State taxes, Estate taxes, etc.).
d) Foreclosure or Receivership.
e) Bankruptcy (old or current).
f) Other Liens (judgement liens, Homeowners Associations, property taxes, etc.).
g) Property held in Probate, Trusts, Family Limited Partnerships, Irrevocable Trusts, corporations, etc.
h) Medical Emergency, Unemployed.

10. Property has characteristics making it difficult to obtain a bank loan, including but not limited to:

a) Partially or nearly completed construction of building.
b) Property improvements - Rehab
c) High Vavancy- loan is needed to increase occupancy of income property.
d) Seismic (Earthquake) retrofitting.

11. Non-profit organizations (churches, foundations).

12. Purchase of Note(s) secured by Deed(s) of Trust (performing & non-performing).

13. Note Hypothecations (Loans secured by Assignment of Note(s) & Deed(s) of Trust).

Private Money Loans are based primarily on the protective equity in the property. To a lesser extent, the borrower's credit history is also considered. Contact Vector Financial Systems today to discuss your specific private money loan situation! 

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