Blanket Loan
Also known as a blanket mortgage, this type of loan covers more than one parcel of property. Usually, individual parcels are released or partially released from the blanket loan / mortgage as the debt is paid off.
Hard Money Tip Of The Month
Foreclosure
Obtaining a Hard money loan can prevent a foreclosure. These loans are
the type that bring out the best and the worst in hard money
lenders. If you are facing foreclosure on a property (either one that
you own or one that you want to purchase before it forecloses) hard
money lenders may be your only
resource for sufficient cash in a timely manner.
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What is Hard Money?
A hard money loan is a specific type of asset-based loan financing in which a borrower receives funds based on the value of a parcel of real estate. Hard money loans are typically issued at much higher interest rates than conventional commercial or residential property loans and are almost never issued by a commercial bank or other deposit institution.
Hard money is similar to a bridge loan which usually has similar criteria for lending as well as cost to the borrowers. The primary difference is that a bridge loan often refers to a commercial property or investment property that may be in transition and not yet qualifying for traditional financing. Whereas hard money often refers to not only an asset-based loan with a high interest rate, but can signify a distressed financial situation such as arrears on the existing mortgage or bankruptcy and foreclosure proceedings are occurring.
Many hard money mortgages are made by private investors. often in their local area. Usually the credit score of the borrower is not important. The loan is purely against the collateral of the property. Typically the maximum loan to value is 65-70%. That is, if the property is worth $100,000 you can borrow $65,000-70,000 against it. This low LTV is to cover the lender if the borrower does not pay and they have to foreclose on the property.
A hard money loan is a species of real estate loan collateralized against the quick-sale value of the property for which the loan is made. Most lenders fund in the first lien position, meaning that in the event of a default, they are the first creditor to receive remuneration. Occasionally, a lender will subordinate to another first lien position loan; this loan is known as a mezzanine loan or second lien.
Hard money lenders structure loans based on a percentage of the quick-sale value of the subject property. This is called the loan-to-value or LTV ratio and typically hovers between 60-70% of the market value of the property. For the purpose of determining an LTV, the word "value" is defined as "today's purchase price." This is the amount a lender could reasonably expect to realize from the sale of the property in the event that the loan defaults and the property must be sold in a one- to four-month timeframe. This value differs from a market value appraisal, which assumes an arms-length transaction in which neither buyer nor seller is acting under duress.
Report Date:Summer 2008 Buyers’ or Sellers’ Market: More buyers than sellers Average Time on Market: 60-90 days Market Trend: Increasing Housing Inventory: Good supply - all prices Average Home Price: $275,000 Compared to Last Year: Down 10-15% Prices As % of Asking Price: 95-100% Greatest Activity: First Time Buyers Average Sold Price: $275,000
