Many of you have experienced what its like to jump through hoops to get a bank loan. In todayâ€™s lending environment bank underwriting criteria is almost intolerable and more people are looking for hard money loans or private money loans to take advantage of fleeting opportunities. I hear a story nearly everyday where a perfect credit and income borrower is turned away by a bank or delayed in getting a conventional loan for one reason or another.
For example, yesterday someone came to me for a hard money loan because they were about to lose a property they had under contract. This was after the bank told them to pay $90,000 in estimated tax for 2012, and thereafter that they would need to wait another 4 months until the hard copies of the returns were received. This is just terrible to do to someone who has scrambled to take advantage of an opportunity and has jumped through every hoop to get a bank loan. But this is the reality of bank lending right now.
More and more people, who never thought they would have to pursue a non-bank, private money, or hard money loan, are finding themselves having to go in that direction. Although many people will complain about the interest rates ofÂ hard money loans, the rates charged are low, compared with the rates of hard money loans in the 1980â€™s and 90â€™s. And as more and more lenders enter the market and want to make hard money loans, rates will continue to become more reasonable. Because banks wonâ€™t be loosening up their underwriting standards anytime soon, private money and hard money loans are sometimes the only option.
Posted by Corey Ann Curwick of Private Money Utah