Avoiding Repossession With A Cash Injection
It seems very ironic that when you need credit
, you cannot get it. In America today, there are thousands of homeowners who are in danger of losing their homes. Most people who are in this position, have recently experienced some credit problems due to slow payments.
This is where the "hard money" loan comes into play. The term hard money refers to money that one can borrow if their credit is less than stellar. This money is usually available from private individuals who lend money on real estate at a high rate of interest. In the right situation, this type of loan can be very helpful to some borrowers, to some, it may be disastrous.
Most of the hard money loans that are made today come from private real estate investors. These people are not loan sharks, but they are not in the business of charity either. The hard money investor will do all in his power to guarantee that he gets his money back with interest.
In order to get a hard money loan, you will not be able to borrow any more than 75 to 80 % of the value of the property. This will be a total of all loans on the property. If the investor will allow you to have a first, he will not lend you any more than the difference to reach the 80%. Some of these investors will not lend in a second position at all and will demand you pay off the first and borrow all the money from him so he is sure he can get his money out of the property if there is a default.
If you have a piece of property that is leveraged and cannot borrow hard money on it, you can use another property for collateral. This is the option that many borrowers will take if there is a need for a small amount of money.
When you take out a hard money loan it is important that you be honest with the lender and yourself to make sure you can make the payments. In the case of hard money loans, you will find that the lenders are usually quite creative in setting up the repayment schedule and you can get the help you need.
The interest on a hard money loan will be high, so make sure that you can make the payments and not turn a bad situation into a nightmare.
In hard money loans, the lender will make good money on his investment as he is taking quite a risk with the loan. You will be able to save your house and the high interest will be worth the risk. If you see this from this point of view, both parties will come out of this business deal with a good outcome. Given that everyone is going about the process with their eyes wide open, this can be a win - win situation.
You can find these investors on line or through your local loan broker.
by: Sarah Brenning-Rose
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