house of moneyWhat would you do to save your home? For some desperate homeowners, there isn’t anything they wouldn’t do even for a home miles underwater. With the risk of impending short sales and looming foreclosures knocking on your door, it’s no wonder why so many are turning to last resort loans from “hard money” lenders to help. But before you jump for joy at the thought of quick and easy money, here are some cold hard truths you need to know.
Playing “hardball“: A “hard money” loan is financing where a borrower receives funds that are secured by the value of a parcel of real estate. This asset-based loan can be utilized in a variety of situations. It can be an option in a distressed financial situation such as going through foreclosure or bankruptcy proceedings or being arrears on an existing mortgage. It can also be used for beginning investors who have bad credit and can’t qualify for a traditional loan.
“Hardly” a slow process: Many investors and homeowners favor hard money loans over conventional ones, because accessing funds is faster. Where obtaining a conventional loan can take 30 days or more, hard money lenders offer financing in half that time. This is a huge benefit for individuals purchasing investment properties which usually requires quick financing.
 “Hard” to find: Finding hard money lenders is like finding a needle in a haystack since they’re typically private investors and not mainstream lenders. Sometimes you can find a lender from mortgage broker referrals or a real estate agency. Just make sure to research a few companies to find a reputable one that will best fit your needs.
“Hardcore” interest rates: Hard money lenders charge cringe worthy interest rates and fees that have scared off even the bravest investors. Interest rates vary from 12 percent to 20 percent annually, points from 2 to 10, and terms that can last for six months to longer depending on your credit score.
Hard money loans are hardly an easy process, so make sure you know the terms and conditions, interest rates, and fees before jumping into what many call a temporary fix.

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This is filed under Foreclosures.

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