Private Money Lenders Arizona Risk Less

Private Money Lenders Arizona Risk Less

So, what is a Private Loan? It is a loan made, in this case, to a real estate investor and is secured (collateralized) by real estate.

PRIVATE MONEY LENDERS ARIZONA ARE TYPICALLY GIVEN A FIRST OR SECOND MORTGAGE THAT SECURES THEIR LEGAL INTEREST IN THE PROPERTY THUS SECURING THEIR INVESTMENT.

We are not talking about high Loan-To-Value (LTV) ratios the banks and savings and loan institutions make on homes. We typically employ low LTV ratios to our Private, also called Hard Money Lenders Arizona, to increase security of the loan. Standard LTV ratios are usually under 75% of the value of the property securing the loan and frequently as low as 60%. This means additional security on the investment.

For example, if a property is valued at $100,000, Hard Money Lenders Arizona would usually not loan more than $75,000 dollars on the property. That’s a 75% loan-to-value ratio. This approach taken by private money lenders Arizona is obviously a much safer approach from that taken by conventional lenders. These banks get into trouble because they make loans at a 90%, 95%, or even 100% loan-to-value ratio leaving them no equity for transfer costs, if they are ever forced into a position where they have to take back the collateral property. It is in the best interest of the hard money lenders Arizona to minimize risk and maximize return and this is why private loans should not be made without a 25%+ safety net.

private money lenders arizona