It's the scenario borrowers (and lenders) dread the most — what if you can't pay back your Colorado Hard Money Loan? Let's look at some of the consequences. Hint: they're not as scary as they may seem.
Everyone who borrows money has the intention to pay it back. And every lender lends money with the intention of getting it back. In a perfect world, this harmony would remain intact. However, life can be messy. There are unforeseen circumstances that get in the way. The property that looked golden ran into all sorts of roadblocks that killed your profit. The city's unreasonable laws messed you over royally. The timeline you'd so meticulously planned went off the rails and you just don't have the cash to make the payments.
With a bank loan, you might default and receive notices for months before the bank would take your property back and evict you. Then, the short sale or foreclosure would be on your record for years and years to come and that can put a serious damper on your ability to make a living or find housing.
Three Scenarios After Defaulting on a Colorado Hard Money Loan
But what about a Colorado Hard Money Loan? By the harsh sound of the name, Colorado Hard Money Lenders would knock on your door and break your fingers, mafia-style and threaten to make you sleep with the fishes.
The reality is much different. Hard money comes from private investors and is sometimes brokered by third parties and this changes the rules a bit. Many lenders are willing to work with you and come up with a repayment plan that works.
Some lenders will have a clause in the contract that will up the interest rate if you default. For example, the rate could go from 7.5 percent to 11 percent. This gives the borrowers more time to come up with the payment and gives the lender incentive to let things go on longer.
A lender could also foreclose on the property, just like the bank. However, unlike the bank, there is another option. Rather than be foreclosed upon and have that on your record for many years, you can often choose to give a deed in lieu of foreclosure. This may satisfy the loan, leaving you free and clear, and leaving your credit score and history intact.
Colorado Hard Money Lenders in Colorado
Every Colorado Hard Money Lender is different and every Colorado Hard Money Loan can be customized to fit your situation. Call or chat with us today to find out how much you can get and how we can work together to get you the funding you need.
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.