pros/cons of HML and or banks/credit unions

[Raul Quinones]

as a new investor i was trying to gain some clarity on which route would be a better start.I was told there were ways to get loans for less than 50k wondering how much truth there is to this. once again any advice is appreciated thank you and God bless.

[Larry Turowski]

@Raul Quinones To answer your title:

Hard Money Lenders

- They'll generally lend on sub-$50K properties.

- They don't care what your credit is, just that the property is worth a lot more than they are lending you.

- They typically lend for 6-12 months only.

- Their interest rate is way high, generally 8% to 12% these days.

- They don't care about the condition of the house.  In fact, they typically lend on rehabs and may even lend the rehab costs.

Banks

- Their interest rates are market rates.

- They'll lend for 30yrs.

- They generally won't lend on properties in need of more than cosmetic repairs.

Credit Unions

- They are similar to banks.

- Their interest rates will be similar to banks.

- You have to be a member

- They will be more likely to do non-conforming loans, which means they'll have their own standards for lending and may be a little more lenient.

Most likely you'll need to do hard money on a low end property.  If you do more than one you can combine them into a blanket mortgage that covers 2 or 3 or more, and will then be over the $50K threshold.  Some credit unions will do this.  So you'll purchase with HM, then after a seasoning period refi with a blanket mortgage through a credit union or small local bank.  You'll only be able to get about 70% of appraisal, though, so make sure you either have the difference, or buy at a discount.