Monthly Archives: February 2013

The Ins and Outs of Hard Money Lenders

If you want to invest in real estate but you don’t have cash, you have to fund your investments through a loan. Bank loans are a possibility, but they require a substantial down payment that can really put a strain on your finances. Most banks require about 20% down, which equates to $20,000 on a $100,000 home. As a real estate investor, you might be interested in any alternative that doesn’t require as significant of a down payment. That is exactly what hard money lenders provide and it’s a great opportunity to get funding for a real estate investments. One alternative to hard money lenders are direct payday lenders but they usually deal in small loans amounts.

Hard money lenders DO charge higher interest rates than banks

Despite what another source may have told you, hard money lenders typically have higher rates than a bank. They use your real estate investment as collateral for the loan, which means it’s a much shorter loan than a traditional bank loan would be. Once you’ve sold the property, your hard money loan would then be paid off in full. The shorter the loan is, the more interest they have to charge you in order to make a profit and that’s why hard money lenders charge the interest rates that they do.

Hard money lenders charge very LITTLE upfront as a down payment

Since hard money lenders provide real-estate backed loans, they have collateral in case the investment doesn’t work out. This is why they are comfortable charging very little upfront. The benefit to you as the buyer is substantial. This means that you won’t have to pay a high down payment like you would with a bank. On a $100,000 home, you might only have to pay $2,000 – $5,000 down with your hard money lender, opposed to the $20,000 that the bank would ask for. Hard money loans are an excellent way to fund your real estate investments without breaking the bank.

Hard money lenders DO hold you liable for what you owe

Unlike a bank where you can sometimes use a short sale or foreclosure process to get out of your loan, a hard money lender is still going to hold you liable. In fact, the property you are buying is used as collateral. If you are unable to sell the home and pay back the loan, your hard money lender can take the home as payment and your loan will be forgiven. This is why hard money lenders never provide loans for higher amounts than the value of the real estate that you are buying.

Hard money loans CAN help you afford renovations

As a real estate investor, you are likely to make your profit by flipping homes and making them more valuable than what you purchased them for. Hard money loans require very little upfront, which means that you will have more money to afford renovations. Some hard money lenders will even provide you with a loan that includes the money you need to complete the remodel. This can be very beneficial to your finances and it can help you flip homes without stressing out about the money that you are spending.

Hard money lenders DO NOT use credit as a determinant for your approval

A hard money lender is very unlikely to use credit as a determinant for your approval. This is unlike banks that have strict policies that they must abide by. Your approval will be based on your income, the property that you are purchasing, and the value of the home. This allows an individual with poor credit or even no credit at all to still qualify for a loan. Additionally, since hard money lenders require such a small down payment, you don’t need much money to get started.

Car Insurance Coverage Limits You Should Have

Car insurance is a serious decision that people have to make to drive a car. Insurance agents will always suggest to take out as much coverage as possible to protect you and your car. However, since you car insurance policy offers various types of coverage, it is a good idea to know what are the limits that you have. Talk to the insurance agent and explain to him or her that you need to know in detail what the benefits are for each of the clauses on the car insurance policy that you have decided to take out.

Car InsuranceRemember that a standard car insurance policy may include as much coverage as you need, hence your car insurance could be considered a collection of different coverage policies to protect yourself and your car at different events and circumstances with different limits, as well.

Different Clauses, Different Coverage Limits

Car insurance includes the cost of medical care for the passengers traveling aboard in a car in case of an accident. Medical expenses have a limit of $ 2,000 for each traveling companion.

Personal Injury

Protection is usually required by law in several states of America and covers all medical expenses for you and your passengers independently of whoever was at fault in a car crash. In this case, the limits are determined by each state and insurance companies abide by them, including the corresponding state limit for this coverage.

Liability for Bodily Injury, is another concept included in car insurance, and pays for personal injury that the driver or traveling companions suffer. However, the limits for this coverage varies from state to state and also include liability coverage in the case someone sues you. Thus limits can be as low as $10,000 per individual traveling in an insured car, to $20,000 when the driver is injured in such accident.

Uninsured and Underinsured Motorist

Coverage are another add-on clause to your standard car insurance that protect you when you are involved in an accident where the other driver is responsible, but he or she does not have enough insurance, too little, or none. The limits of this coverage matches to the limit of your own coverage, although in some states, is limited to personal injury only, while in others may include damage to your car. Limits in this case are regulated by state law.

Comprehensive coverage pays the cost of damage to your car that is not caused by a collision, including fire, burglary, etc. More than limits, the coverage is based on deductibles versus premiums. The higher the deductible chosen for your policy, the lower the premium.

Finally, Collision coverage pays for damage to your car in the case of an accident. Similar to the comprehensive coverage, the limits are regulated by deductibles and premiums. Deductible limits usually range from $250 to $1,000, but are worth it if you have an expensive car, although this coverage is optional and not required by law.

Tailored Coverage

If you are concerned about the different insurance limits, deductibles and premiums, remember that all of the above coverage is optional and you can get an insurance policy tailored to your protection needs and within the limits that you expect to pay and get paid in the event of an accident.