What is a hard money loan ?????

Question

I am currently trying to refinance one of my properties.The problem is that my credit score plumitted because I am behind on payments(I have a variable interest rate & noone is currently renting my home).My payment keeps going up & I'm afraid I won't catch up!!!They tell me because of my score I would only qualify for a hard money loan & on top of that I cannot cash out.I've heard these loans are VERY high risk.Are they trying to srew my over.What do I do??My payment keeps going up,I need to cash out so I can pay for backed up bills.They tell me the only program that can give me a low monthly payment that is fixed is Option 1.Please give me your opinion.Thanks people I appreciate the help!!

I saw that one of you said to have someone else go into the loan with me & I have already tried that.My mom has a fico score in low 800's & even that way the bank's keep telling me that they will use MY score over hers.They tell me that they HAVE TO use the lowest score.So that doesn't work for my either.

Answer 1

I am not sure why you would have an adjustable rate for a rental. That isn't a very good investment.

Maybe you can 1031 it since you can't refi.

No one is trying to screw you over, I am sure you knew that the rate would raise.

hard money loans are high risk for the lender, not the borrower. You are going to pay 10-12% interest though.


Have you pried prosper.com?


Don't contact the predators posting here, they are very bad news. Some of the worst ones around have posted.

Answer 2

A hard money loan is not based on you or your credit, but almost totally on the value of the property. Normally these loans are used for very short term purposes, say during a rehab of a gutted building. They will normally lend 60%-65% of the repaired value of the property, although you can sometimes get someone who will finance up to 90% (very rare). The interest rates are extremely high, normally 12-25%.
They should NEVER be considered an option to get you out of a bad mortgage. It is like getting a payday loan. You get some money now but then they will own you until they suck all the money out of you. Only use a hard money loan if you have a solid exit strategy that will get you out within 3-6 months.

To me, it sounds like you have two realistic options:

1) Bring in a partner, someone with some good credit who can help you get a loan.

2) Sell

Answer 3

A hard money lender is a non-institutional investor (lender) from the private sector. These are typically individuals with substantial cash reserves and are willing to loan on properties at higher than average interest rates because the buyer (or person refinancing) is in a much higher risk category. Most of the HM lenders in my area won't lend an amount that exceeds 75% Loan To Value and even that is rare. Also, most HM lenders want a quick return on their cash, typically 1-3 years, so unless you have a game plan in place I doubt a HM lender will consider you either, especially because you're already behind on payments.

If you have any equity, you need to contact your lender and let them know what is going on and that you're trying to sell. You're in denial if you think things will change financially in the short term, so don't waste time thinking about a refinance and instead get on the ball with a sale.

Answer 4

Hard money is basically private money...it would be like you asking me for a loan but instead of me giving you my money i get it from another person and then lend it to you. the cost are high and generally have pre-pay penalties.....also many of these lenders require high loan to value hoping you will default and they can foreclose. ask your mortgage company for a fire sale number that will tell you what they will take for the property and then you could lower the amount you borrow and thus the payment

Answer 5

A few folks have given you some good information.

However the scumbags are at it again. Don't waste your time contacting the scumbag spammers who post their "I can help!" garbage here. Most of them are scammers working out of Nigeria or Latvia or some other God-forsaken hellhole. Even if they're not, they're not bright enough to read the CG and TOS so would you REALLY want to trust them with a major item like a mortgage??

Answer 6

Sell the second home before you get so backed up and lose it all. You are already behind and hard money loans are high interest and and LTV dependant because they want the high interest and they really want your home.....

Answer 7

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Answer 8

Dont do it