Owner financing is growing in popularity. Individuals with liquid cash are loaning it to those who may not otherwise qualify for the more traditional financing methods.
One of the biggest misconceptions I see people having when investigating owner financing or even hard money lenders in Spokane is that rates will be similar (or even close) to nationally advertised mortgage rates.
National banks who lend money out at the advertised low rates have very specific criteria in which they will lend to, people who fit into that box are of a risk level that they can lower the interest rate to that level, there’s also the element of quantity too (having millions of loans with the money diversified sure helps).
Individual or Hard Money lenders loan out money to people who don’t necessarily fit into the box of the mainstream borrower. Their terms are usually in the ballpark of 65% LTV (loan to value) meaning on a $100,000 property, they would loan $65,000 on the property and the borrower would have $35,000 down payment. They usually charge some points too. Most are between 1% and 5% of the loan amount as a fee for loaning the money. Interest rates vary widely. Most are between 8% and 15% although it is all over the board.
Hard Money and Owner Financing are great options for borrowers with a little cash to put down who don’t fit into the traditional lending box. If you’d like information, please contact us and we’ll put you in touch with some of our lenders.