What Are Hard Money Lenders?
Hard money lenders offer an alternative way of getting loans, including those you would use to pay off your mortgage. They differ from traditional mortgage lenders in that the loans come from private individuals or investors based on the property you are using as collateral (in this case, your home). There are a number of reasons that people would go to a hard money lender instead of a traditional lender. These lenders will provide loans if there is equity in the property and they may not be concerned with the credit score. They want to be in a position to take the property and get paid if you fail to meet the obligations under the loan.
Many people go to these types of loans when they are in distress through a foreclosure or some other financial crisis. These loan come with high fees and costs, and the fees can increase when the lender knows you have no other options.
Hard money lenders aren’t interested in whether you can actually pay back the loan as they will simply take the collateral in cases where you cannot pay. This means credit scores and credit history are not necessary and they can speed the process up considerably.
Why Should You Be Wary of Hard Money Lenders?
Many times, Hard Money lenders will set up the transaction so that they can try to get around complying with laws like the NJ Fair Foreclosure Act. If you are asked to deed the property to a Limited Liability Company (LLC), be aware that if you do not pay the loan, the lender will say that it is a commercial loan and not a residential loan. They will argue that laws concerning notices and fees do not apply. If you find yourself in a situation where you need help to pay off an existing mortgage, make sure you understand exactly what type of loan you are getting.
Are You Facing Foreclosure From a Hard Money Lender?
There are countless investors and lenders out there seeking to take advantage of homeowners in distress. Don’t let them take advantage of you. Contact Ira Metrick today to discuss your situations and your options for saving your home from foreclosure.