Can You Avoid Foreclosure with a Hard Money Loan?
Foreclosures are everywhere!
The residential foreclosure rate continues to rise. Because of the lenient lending policies that were so popular during the housing bubble, many home owners now find themselves in situations they never thought possible.
Following recent losses, banks have created new credit policies that make it difficult for home owners to refinance their properties. Sub-prime borrowers are finding it impossible to get the money needed to avoid foreclosure. Fortunately, private lenders have seized the opportunity to help people avoid foreclosure by providing hard money loans.
An alternative to foreclosure
Times have changed and a hard money loan may be the only alternative to a mortgage foreclosure. Hard money loans still carry interest rates that are higher than those of most banks and traditional lending institutions, but now lenders are willing to tailor agreements in accordance with the best interests of all parties involved. Used properly, a hard money loan can allow you to make the corrections you need in order to save your home from foreclosure.
The “loan shark” reputation
Lenders offering hard money loans have been referred to as loan sharks in the past, because they had a reputation of being tough and ruthless in their application of the terms of the agreement. They charged high interest rates and did not hesitate to seize properties when a borrower defaulted on the repayments.
How to make your hard money loan a success
There are many hard money lenders in the market, all offering different terms and conditions. It is in your best interest that you thoroughly research these lenders before making a decision to borrow, and discuss your situation with people who may have valuable input. Before you choose a lender, do the following:
- Make an appointment with several lenders before you make a choice, so that you can see if their terms and conditions are right for your situation.
- Remember that these loans are negotiable, so be prepared to bargain.
- Every dollar you save is extremely valuable, so do not borrow more than what you need.
- Hard money loans have relatively high interest rates. You could be headed for more trouble if you can’t make the payments, so make a plan right now to pay off your loan as quickly as possible.
- If you have access to an accountant or a real estate attorney, do not hesitate to use their services, as they may be in a position to put you in touch with a reliable lender from their list of contacts.
- Be prepared to give your true financial status to the loan officer. Honesty can make the difference between getting a tough deal and a favorable one, because even the best-intentioned lenders want to minimize their risks.
Is foreclosure really an acceptable option?
A hard money loans is a great way to get the extra time you need to avoid a foreclosure. The real estate market is slow and traditional lenders are tightening up on credit policies. The best way to save your home in this economic climate may be to get a hard money loan. What have you got to lose? Hopefully, not the house.