How Does Private Lending Work?
What Is A Hard Equity Lender?
How Do I Find Hard Equity Lenders?
"Discover The Easiest Way To Borrow Money Without Begging A Bank, Or Even Proving Your Income - Even If You Have The Worst Credit On The Planet!"
Private lending is a world unto itself. Completely different from the snobby banking process we're all used to. Fact is, using this fast and easy money to solve debt problems is a true "God send" if and when you need it.
While it can come with slightly higher costs, the benefits are through the roof.
Before I tell you how you can profit by using private money, you should know who and what these "private lenders" are.
First off, they're people -- usually with lots of money. They lend their money to people and businesses in return for a rate of interest. They always lend in the form of a mortgage against some type of residential or commercial building, or on raw land.
They are also called "hard equity investors" or "hard money lenders" or just "private investors". The interest rate varies but is always higher than "banking" rates. But it's also without "banking hassles"!
When you want a "hard money loan" you won't care about the rate. You'll only care about the money and the problems it solves.
Which is also what makes them unique. They solve problems. High debts, bad credit, no credit, unique property, bankruptcy, foreclosure? No problem. They'll lend to you when nobody else will. They'll stop foreclosures and bankruptcies and they'll give you money even if you have the worst credit score on the planet.
What's unique about these "hard equity lenders" is this.
1) They don't ask for two dozen forms of ID, your DNA and the rights to your children. They only look at the value of the property or business they are lending money on.
2) They make the decision to lend or not to lend. They don't have to "run everything by" some wicked hook-nose underwriter. It's usually just one person making the decision. And they make that decision quickly. Usually within a day or two.
So how much will they lend? Usually it's about 65% of the property's value. So if a home is worth $200,000 they'll lend about $130,000. The loans are always interest only mortgages (which keeps the payment lower) and they can close in about 3-7 days! That's fast in mortgage lending.
So let's say you lost your job and you're behind on your mortgage by 4 months. You just got a "default notice" in the mail and the lender is going to foreclose on your home. No bank will touch this type of loan.
So, if you have enough "equity" in the home a private lender will pay off your old loan - catching your payments up - giving you a chance to get back on your feet. Then when you've made a 12 or so payments on time with the private, you might qualify to go back to an institutional bank financing.
Here's another example. Let's say you have a credit score in the 400 range. Institutional banks won't even talk to you, no matter how much equity you have. So you get a "hard equity loan" make some payments, get your credit cleaned up in the mean time, and then you refinance the loan to better rates. But the point is you get your money now! Not later.
Example #3. You just started a brand new business. Banks want 2 years of tax returns or proof you've been in business for 2 years. But you just started 6 months ago! No problem. A "hard money loan" will get you the cash you need to do whatever: fund your business, pay off debts, or anything you want.
With all of the crazy talk about a "mortgage meltdown" and foreclosures today, private money can be a true life saver for those in need.
I've helped clients buy rental properties with these loans. One guy only had to bring about $1,500 to closing and the private lender gave him enough money to buy the "fixer upper" and also enough to fix it up. The house has since tripled in value! That's pure cold cash in the bank.
One client had great credit but had just started a business. She wanted to buy 20 acres of prime land. I got her a "hard equity loan" and she closed in about a week. The real estate agent was thrilled, as no bank or mortgage company would touch her. We got it done and earned a client for life.
About the author. Dan Dowling has been helping people in Florida fund private money mortgages since 1995. His unique approach as a consumer advocate who "bucks the system" has made him invaluable to his clients as he exposes the corrupt nature of the banking system. His website provides more information http://www.frombillstofreedom.com/ His office is in Altamonte Springs, a suburb of Orlando.
Copyright Dan Dowling 2007 All rights reserved.
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