Sometimes our borrowers need funding but have a great existing loan on their property. In situations like these being able to offer hard money seconds is a great solution as it allows the existing loan to stay in place while still allowing our clients to access the equity to meet their needs.

Hard money loans are expensive. If there is bank financing on a property already, chances are that our loan is going to cost more, sometimes a lot more. Whenever possible we like to save our clients money, and that means offering solutions to minimize the amount of hard money financing they need to take on. It makes no sense to pay off a loan with a rate of 4% to take a new loan with a rate of 10%!

Our second position hard money loans will take a subordinate position to your existing financing, saving you from not only paying higher interest on that money, but also saving you from paying points and fees on that money. The drawbacks to our hard money seconds are two fold. First, our loan to value ratios are going to be a little more conservative. Typically speaking we like the total loan to value between the existing first and the new second to be 50% or less. It is not uncommon for us to take that ratio up as high as 60%, but that decision is made on a case by case basis. The second drawback is that our seconds are going to typically be more expensive than our first position loans. Typically speaking the rates on our seconds will be a couple percent higher than a comparable first at the same loan to value. The fees, expressed as a percentage, are also typically a little bit higher.

The benefits of being able to keep your existing first, however, typically outweigh these drawbacks. Even though the rate and fees are a little higher, you are paying that higher rate and fees on a smaller loan amount, which typically is going to be beneficial.

• For more information about our Hard Money Seconds loan programs, contact us directly or complete our loan inquiry form above.