America is going through tough financial times; it is no secret that many Americans have fallen victim to unscrupulous lending practices and that the most important terms and conditions were not disclosed during the negotiation of a home loan. We are going through a financial bubble and because of reforms to lending practices home owners are desperate because they no longer qualify for new loans, either because of lower property values or more stringent lending guidelines.
As the saying goes, desperate times call for desperate measures but, the measures that most people are taking are definitely not the best ones. A few years ago property owners counted with their home equity to bail them out of any financial problem. Because of the current situation, properties have lost tremendous value and there might not be enough equity to refinance a loan. Due to this, many Americans are turning to credit cards to maintain their lifestyle.
But the solution to a tight financial situation is not to turn to credit cards because their interest rate can go as high as 30% (compounded daily) and they will just add to the problem. Hard money loans on the other hand, are better financial instruments which provide more affordable interest rates and terms that can help a property owner sail through this economic recession.
Hard money loans can go as high as 70% LTV (loan-to-value), although most would like to keep the LTV below 65%. Hard money loans are available on almost any property type, commercial, land, investment properties etc. Hard money loans can also be issued on an owner occupied property to relieve financial stress. These types of loans can be amortized over a period of 30 years according to the borrower needs. Even with hard money, however, it is important to be able to show the ability to repay the loan. The huge advantage with hard money these days is the flexibility with which you can show that ability. Bank statements for self employed borrowers, contracts and other creative ways to show the money being made that will enable the loan to be repaid.
Stopping Foreclosures with Hard Money Loans
Because of the banking crisis more and more home owners are losing their properties to foreclosure, the sad part is that many of those foreclosures can be stopped or avoided if the homeowner takes appropriate action. In California alone foreclosures have been up 260%, this figure is based on market analysis performed on July, 2008 by housing authorities. Hard money lenders often times are the only option for homeowners who no longer qualify for institutional loans under the new and more stringent lending guidelines.
Hard money loans can be used in order to salvage a property and avoid foreclosure. However, a property owner needs to act as fast as possible in order to avoid interest and penalties from accruing and worsening the situation. Additionally, hard money loans offer the ability to cross collateralize multiple properties. If there is not enough equity in one to get the job done, you still have options for financing.