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The Latest Updates to Hard Equity Loans

27 June, 2014



Whether or not mortgage equity loans are new to you, it’s been the standard form of funding for entrepreneurs and real estate investors to obtain quick mortgage loans. There has been one or two recent changes that have put equity lending in a greater need.

The 1st change was shortly after the housing crash of 2008, lenders started restricting credit restrictions on their borrowers. Before this change occurred, borrowers qualified for loans with less restrictions. Borrowers could get loans with lower credit ratings. Now plenty more banks ask that you are in a excellent credit standing to obtain a traditional mortgage. This is not the case with all lenders like Quick Action Mortgage Inc. In Miami, FL. They can okay an equity loan for home investments, corporate owned and commercial properties with no credit check or revenue confirmation.

The new Central authority law in mortgage equity lending that happened after the 2008 housing crash is if an individual is purchasing or refinancing a home where they’ll be living, the equity bank must qualify the customer with their incomes, not just the equity. They can not go over a 50% total debt-to-income ratio. This works by taking the new home loan payment and the current monthly debt payment on your credit report, combining those numbers and comparing it to your monthly revenue. Your debt cannot surpass 50% of your revenue. Feel free to call us if you want help understanding this.

With this new law it makes it trickier for a homeowner to qualify for an equity loan. We hope one day this law will be modified as it is not helping house owners obtaining a straightforward equity loan that was around for over 50 years before the governing body made a decision to change the law. On a residential rental dwelling, commercial dwelling, or a corporate owned dwelling no revenue verification or a creditworthiness check on your debt is needed. While the new laws instituted by the Government during the past 2 years has effected mortgages for people purchasing houses they live in or refinancing it’s generally a mortgage equity loan economy for residential investment purchases or refinancing the property, commercial, and any company purchases or refis.

You could wonder what it was that led to so many equity banks to change the way that they approve borrowers for loans. There are several things that have been held accountable for the changes. The first is that many of those banks made bad loans utilizing the wrong kind of collateral. When they made the loans, they were expecting the economy to boom, but unfortunately they did not predict the crash of 2008. The crash also led to large declines in property values, which in its turn led straight to strategic foreclosures and defaults.

Another thing that happened was many borrowers were unable to sell their properties or find alternative sources of financing, which tied up capital that lenders should have been in a position to lend to other borrowers. It’s vital to understand that hard cash are historically meant to be utilized as equity loans.

These contributors ended in many equity lenders dropping out of the market completely, and new changes to underwriting criteria in the ones that stayed in the market. Otherwise some equity lending mortgage firms that’ve been wise with their investments are now thriving as their competitors has fallen out of the game. Quick Action Mortgage is a powerful example of this, still healthy and powerful in business.

To get a Miami Hard Money Loan, contact Quick Action Mortgage today. They can help you get an equity mortgage loan without checking your credit score. Read more about Hard Money Loans.



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