Fort Worth hard money loans can be used for different, significant, purposes. Some examples include Bridge Loans, Fix and Flip Loans, as well as Construction Loans, among others.
Fix and Flip loans are used for the purposes of purchasing a property for investment purposes. Construction Loans delve further into this process by providing the capital to repair anything that may require needed attention at an investment property, before re-selling (flipping) it at a higher price. Correspondingly, a Bridge Loan is typically for real estate investors to have quick access to capital within the house-flipping process.
Hard loans are available across the United States. Fort Worth hard money loans can be useful during the COVID-19 pandemic. These loans are expected to increase during this period. For example, U.S. Bank patrons are being offered personal and simple loans.
With a simple loan at this banking institution, a customer is allowed to borrow between $100-$1000 USD. For every aforementioned $100, a $6.00 interest fee is applied during the repayment process. By contrast, personal loan recipients can borrow between $1000-$4,999 USD at a 2.99% Annual Percentage Rate (APR).
As of early April 2020, marking a 30-day period of different COVID-19 quarantine responses taking place nationwide, there have been drastic changes in the residential mortgage industry. Loan-to-value ratios regarding properties have been cut between 5-10% since February 2020. A borrower with liquidity, good credit, and real estate experience will have the most ease of access during this period.
Different types of hard loans concerning properties are valued highest in suburban, west coast homes near Interstate-5 (I5). First Capital Trust Deeds (FCTD) expects to be funding these respective areas with loans in states such as Texas, Washington, California, and Oregon, among others.
FCTD also expects commercial loans, blanket loans, and second mortgages to have a Loan to Value (LTV) ratio of 50-60%. Most hard money loans with this institution, other than construction and fix and flip, will be standardized at these percentages.
FCTD will be requiring borrowers who are receiving construction loans to contribute more to the cost of the building. Fix and flip loans will have an LTV ratio of 70-80%.
Some lenders who provide a loan with an LTV ratio at 80% are requiring a 12-month interest reserve. This entails that the borrower deposits 12 payments into a sub escrow account to ensure debt repayment associated with such loans.
Small business loans are also being put into effect due to the COVID-19 crisis. An example includes the Paycheck Protection Program receiving $310 Billion USD from Congress for this purpose.
The program can give these loans to such businesses. These loans can also be forgiven if certain conditions are followed. These conditions include using the capital to pay health insurance premiums, utilities, rent, employee salary, and not firing workers.
This program had been specifically designed to keep companies, with less than 500 employees, open and provide salary for a period of eight weeks. Some franchises, including Ruth Chris Steak and the Shake Shack, received more than $10 million USD in such loan capital.
Big businesses, in which more than 500 people are employed and are considered to be severely distressed also receive loans and grants. The passenger airline industry received a total of $50 billion USD. Half of that capital received served as a grant while the other portion was loaned.
Companies considered vital to national security receive a $17 billion USD loan. Other states, cities, and businesses received loans of up to $425 billion USD.