Déjà vu? Hard Money Sources is now connecting real estate investors to lenders in order to allow those investors to finance 100% of their respective real estate purchases.
Unlike what we saw during the uptick to the housing crisis in 2007-2008, Hard Money Sources is making two loans to real estate investors. The first loan is a personal loan based upon the individual investor’s “credit worthiness.” This loan can also cover loans for down payments. The second loan is a traditional hard money loan backed by the equity of the property being financed.
The combination of these two loans can range from $100,000 to $1M. The borrower must have a minimum FICO score of 680 AND provide income verification in order to be approved. (Usually, the most a borrower can expect from a lender is a loan that equals 90% LVT or 75% of the value of the home after repairs are made.)
The key phrase here is “the value of the home AFTER repairs are made.” Harvard University’s Joint Center on Housing Studies (JCHS) is forecasting home remodeling to fall substantially in the near future and Hard Money Sources is looking to mitigate that drop by making these zero down payment loans available to investors.
Harvard’s JCHS Leading Indicator of Remodeling Activity (LIRA) Index is predicted to fall from its current 7% to 2.6% in Qi 2020. The historic average of remodeling activity is 5%; such a drop to 2.6% would be similar to remodeling activity in 2013.
Chris Herbert, managing director of Harvard’s JCHS, said, The slow down in home price appreciation, home sales activity and remodeling permits are lowering our expectations.”
Confidence levels among members of the National Association of Home Builders (NAHB) reflect Harvard’s JCHS predictions. According to Robert Dietz, chief economist with the NAHB, “The NAHB’s forecast calls for slowing growth, declining home price appreciation and existing home sales volume, combined with rising construction costs” caused NAHB confidence levels in the housing market to drop 3 points in April 2019.
Even if declining mortgage rates mitigate declining sales and refinancing, unlikely, Hard Money Sources is hoping to at least brake such sluggish trends.