Colorado Hard Money Lenders
Colorado Hard money lenders lend money to real estate investors who struggle to qualify for mortgages from banks.
Colorado hard money lenders work on the edge of the mortgage industry. They are often not licensed, and they provide funding to investors. Several years ago, banks began to dig into this market by offering subprime mortgages to borrowers outside the norm. However, they quickly stopped due to rising foreclosure rates, turning this market space back to hard money lenders.
Colorado Hard Money Lenders Compensate for Risk
The terms of a hard money loan are aggressive. Interest rates generally start at 8 or 9 percent, with a significant down payment requirement in the range of 20% to 30% depending on the deal. Colorado hard money lenders recognize that credit-challenged borrowers may have few options yet still can come across outstanding deals that they are highly able to execute.
These lenders aren’t heartlessly charging high interest. They have to take into account the probability of foreclosure when pricing the loan. The lender is in the business of lending to people with known credit risks, which means the deal has to be profitable.
Some hard money lenders cut the risks involved by only loaning in geographic areas while avoiding states that perform poorly. Abbey Mortgage is a Colorado-based hard money lender that only lends money for Colorado investment properties. Our geographic specialization helps us provide better insight into their customers’ properties’ current and future value. As a specialized lender who doesn’t operate across the United States, Colorado real estate investors know they can depend on us.
High-cost loan regulations
Current lending regulations allow for an easy lending process for borrowers and lenders alike. While few people may argue about the need for regulation, they can also prove overly restrictive, causing some lenders to bow out. For example, states like Connecticut limit maximum prepayment penalties and closing costs for what they call high-cost loans. They define high-cost loans as any loan with an interest rate 8% higher than a comparable Treasury note.
Some hard money lenders lend money at rates just below the high-cost loan levels to circumvent regulation and minimize exposure to expensive litigation.
The reality is that real estate investors and their lenders both work hard for their money. Borrowers should ensure they are well informed to understand their options, limitations, and expense. Meanwhile, Colorado Hard Money Lenders operate in the legal middle ground, ensuring profitability without dealing with the banking industry red tape.
Your Colorado Hard Money Lender
Call Robert Kearney atAbbey Mortgage today for a free consultation. We are located in Berthoud, Colorado, and have been since 1994.