The prolonged recession in the US has left many homeowners
still in a position where they cannot pay their mortgage. As these homeowners
look for a good way to keep their properties many come across the term hard
money loan. The natural idea would be to think that a hard money loan could
possibly enable you to refinance your home and keep it.
Hard money loans have a false impression of being considered
loans to people with bad credit, or private loans once you just need cash.
Those kinds of loans do exist; there might not be appropriate hard money loans.
A hard money loan is a short-term loan, obtained by real
estate that has MASSIVE equity. Primarily investors that are acquiring the property to rehab it and resell it use
them. Where as it is not impossible to use them to stop foreclosure it is
extremely unlikely that the hard money lender could make a loan for that goal.
To obtain hard money loans you have to have a solid exit
approach. You need to be able to ensure the hard money lender without question
that you will be able to pay back the loan on the maturity date. Exactly what
is your exit strategy? Besides, you may need a large amount of equity in your
home, 35% or maybe more is usually, what they want to see. To consider a refinance
to stop foreclosure then they may want much more equity.
So, is it ever an effective alternative?
If you are in arrears with payments and dealing with
foreclosure, and also have the equity a hard money lender would need then sell
your home. The influx of cash from the sell should have a tremendous affect on
your personal finances and peace of mind. If that is your ultimate goal, and
you have a possible client set up then a hard money loan could be a appropriate
solution for you to prevent foreclosure and get
to agreement with your buyer. As
for using a hard money loan to avoid foreclosure and plan to keep your home it
is not impossible although not regarded by most to become suitable alternative.
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