Who does risk lending to someone in foreclosure? Who does advance cash to some borrower trying to acquire a big property whose price hasn’t been correctly established with a traditional evaluation? Can there be any person who would take a risk on re-financing somebody’s home loan in order for this individual can take away large amounts of cash?
This is practically nothing new for private cash loan companies or people in the hard money loans field; it is almost all in a day’s work. Hard money lenders are private individuals, groups, or small nearby businesses who work outside of the regular borders and limits of traditional financing institutions. They create loans offered to these short of funds and of course, the desperate, just like financial institutions do for their normal customers.
Private money lenders are inherently much more costly in terms of interest rates; but sometimes being the only ones in the spot to assist unfortunate borrowers save awful scenarios. There are private traders who, if the condition is favorable (rate of interest is sufficient and the risk is low enough), might put up the money for a borrower. There are actually brokers along with other agents who organize such hard money lender deals or private money loans.
If it all seems somewhat too shady and a little bit too much with the underworld, fear not. Private money lenders won’t send Chili Palmer following you if you forget a payment. They are not in the business of smashing kneecaps. There are no enforcers. However, this is business. They ask for interest rates that will make typical borrowers tremble and generally base lending decisions on regardless of whether there will be enough equity in their subject asset that they can foreclose and still make an income. Private money acts a unique market and clearly, fulfills a market in mortgage lending; it helps borrowers who’ve specific wants or credit problems that will obstruct the approval of their typical financing. That is, if you can find them.
Normally, private money lenders tend to function inside a specific geographical limit. They prefer to look at assets they are lending against personally and know the place of the land, so to speak. In case you’re trying to find these kinds of private lenders, check your local newspaper’s classifieds or search on-line for nearby mortgage brokers and ask around, it won’t hurt.