Hard money lenders in Los Angeles make loans based on the assumption that the terms to the debtor need to be so they'll gladly foreclose if needed. Traditional lenders (banks) do whatever they can do in order to prevent taking back a home in foreclosure in order that they're the real opposite of hard money lenders.
Earlier, hard money lenders fairly much loaned about the After Repaired Value (ARV) of a home, and the percent they loaned was 60 percent to 65 percent. When the times slowed and then stopped, the reputed hard money lenders in Los Angeles caught in a vice of quickly falling home values and investors that borrowed the money but had no equity of the owner in the offer.
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These rehabbing investors just walked off and left the hard money lenders holding the possessions which were upside down in falling and value daily. Many hard money lenders dropped everything they had and their customers who lent them the money that they re-loaned. Since that time the creditors have radically changed their lending criteria.
They no longer seem at ARV but advance on the cost of their house that they must approve. The investor-borrower should have a decent credit rating and put some cash in the bargain generally 5% to 20% based upon the property's cost and the creditor's feeling daily. But when all is said and done, hard money lenders continue to make their gains on these loans in the very same regions.
Hard money lenders charge different fees for virtually anything including property review, record preparation, legal review, and other things. If you go to borrow hard cash, then expect to want a few of your money and also have some in reserve so it is possible to take the loan before the property is marketed.