Are you having trouble paying your mortgage bills? Losing a job or a new change in salary can affect a family’s ability to pay their mortgage payments on time. However, this doesn’t have to be the end for you and your family. Read on to learn more about how a hard money mortgage lender can help you through your financial struggles.
How Hard Money Mortgage Loans Work
Have you tried getting a traditional loan from a bank or credit union? You might not have much luck if your credit score is too low or you need money right away. Several factors can stand in your way of getting a loan from traditional lenders.
However, all is not lost if you are desperate for financial assistance. When you have no other alternative to help pay your mortgage bills, then a mortgage lender might be your only hope.
Hard money mortgage lenders can come from private individuals or a group of lenders willing to invest in real estate. You can find some good ones online or in your local area. Then you can fill out an easy application to see how much you can borrow from the investor.
Fast Money and Having a Proposal
If you need money right away to pay your mortgage bills, then mortgage lenders are the way to go. They usually approve you a lot faster than traditional loans. So, even if you can get a traditional loan, it might be too late by the time you get the money you need.
According to Financing Strategies For Real Estate Investments, a hard money mortgage lender “will lend based on the strength of deal and not so much on the ability of the borrower to pay it back.” This means that the borrower need not have a history of good credit or proof of income.
As long as the investor will make money off the deal, they will more than likely help you keep your home. Therefore, you need to have an excellent proposal that portrays how you will pay them back the money you borrowed. If it’s organized and thorough enough, then your chances of them approving you for a loan are much higher.
How Much Can You Borrow from a Mortgage Lender
However, they won’t trust you to repay such a hefty loan. You need to put your property up as collateral to get them to agree to the deal. As reported by the Financing Strategies For Real Estate Investments, a mortgage lender will usually lend out 60 to 70% of what your property is worth. This is how they earn a profit from the deal since they can sell the property if the borrower isn’t able to repay. They won’t if they gave you 100% of the property’s worth.
Pitfalls of Hard Money Mortgage Loans
Getting a hard money mortgage loan can save you from foreclosure and losing your home for good. However, these loans have a lot of negative aspects to it than from traditional ones. As stated by the Financing Strategies For Real Estate Investments, these mortgage lenders can charge you an 8 to 18% interest rate on your loan. This is because hard money loans give you a shorter amount of time to repay them back.
They can also charge you points and other fees that will increase the total amount you borrow. Loan points are a percentage of your loan. You might think one or two points is nothing, but if you borrow $200,000, one point would be $2,000 each. That can be more than you bargained for, so make sure you can repay them, and the deal is worth it.
You should shop around to see which lender will give you the best deal possible. It’s important to ask what their interest rates and other stipulations they have before accepting or signing any papers. Each lender will have different rules, so don’t settle for the first one that sounds good.
Research online today to find the best hard money mortgage lender to see if it’s an option for you and your family. There’s always an investor out there willing to give you a shot even when you have negative circumstances preventing you from getting a loan from banks or credit unions. It might help you keep the house you love and avoid a foreclosure going on your credit history.