Finding a hard money mortgage loan is fast becoming the only option for those who are known as “subprime borrowers”. With the economy the way it is today there are a lot of home owners that are suddenly finding themselves in very bad financial situations and are facing foreclosure of their homes. Refinancing these existing home loans is much more difficult now because the leniency that once existed is no longer exists. Banks who offer mortgages are making their loan restrictions more difficult for most borrowers. Companies that offer private lending are now not just a last resort but the only resort with their hard money mortgage loan funding.
The problem with hard money loans is they do carry a much higher rate of interest than loans that banks offer. Usually a huge equity in the home is necessary to get a hard money mortgage. Many of the private lenders who do offer a hard money loan will try to customize the mortgage agreement to be good for both them and the homeowner. In past years hard money lenders were known as “loan sharks” because the rates of interest on the loans they offer are excessively high. When the borrower has difficulty paying the loan back the property is quickly seized by the hard money private lenders. In today’s economy the hard money mortgage loan may be the only way that the homeowner who has found themselves in financial difficulties will be able to remain in their home and escape potential foreclosure.
Now, instead of being “loan sharks” the hard money investor has become a hero affording the distressed homeowner the time needed to make financial changes that will keep them from losing their home. The subprime borrower, or near-prime, non-prime or second chance borrower now has a very useful tool that can help them keep their home.
There are a few things that the homeowner needs to consider before entering into hardmoney loans. Comparison shopping is important to get a good idea of the best deals of the day. Negotiation is possible with the private lender and the fees they offer with their loans should be something that you thoroughly understand. The terms of the loan should be a good deal for both the borrower and the lender. Only borrow what you actually need because money in your bank account tends to be spent, not saved. An attorney who is representing your interests in important no matter how reputable the loan company may be. Finally, honesty is the best policy especially when it comes to hard money mortgage loan applications.