Hard Money Lender
Hard Money Mortgages and Predatory Lending
By Andy
Sep 8, 2005, 18:22

Bridge Loans

• Your home is in foreclosure. You can sell it and come out with some money, but you need time to do this.  You are already have a buyer and have opened escrow. You get a temporary loan to reinstate your mortgage until your sale is finalized.
• You want to buy property, but have to act immediately. You cab either sell other property or arrange financing to cover the purchase, but you do not have time for either. You get a hard money loan until you can either sell or arrange suitable financing.
• you have small business. You have an opportunity to buy inventory at a once-in-a-lifetime price. You know that you can make a large profit, but you need cash to take advantage of the deal. You get a hard money loan until you can sell off enough of the product to pay it off.

All of these loans involve the borrow of mortgage in property - usually his or her home - for a short period of time. Most of these loans are for one year or less. They depend on equity for security, and the borrower's credit or income-to-debt ratios are of secondary importance. The loans fund quickly - some as fast as one week.

The up-front cost of these loans is usually one or two points, plus miscellaneous fees. The higher cost comes when the loan is repaid. This can ne as high as 10% of the balance.

Sub-Prime Loans

This type of hard money loan is the long term loan at an exceptionally high interest rate with high points and fees. The loan can be used for any purpose. It is the loan borrowers get when their credit or income problems disqualify them from getting a B or C loan.

Predatory Lending

The reason predatory lending has risen so dramatically is that many lenders operating in the A market have subsidiary companies making hard money mortgage loans. This has made a huge amount of money available for these loans, as well as aggressive and widespread marketing. The bigger lending institutions got into the hard money business for two reason. First, these loans are much more profitable that A loans. Second, the fast-rising cost of homes over the last several years has made these formally high-risk loans low risk situations. Foreclosed property that did not bring enough to cover the balance owed has been a rarity in many areas of country.

Many predatory lending is avoided by shopping around. If you start with your local bank, saving and loan, and credit union, you should get a pretty good idea as to where you fit ad a borrower. If you only hope is a hard money loan, be sure there is no way you can do without money. If you still want the loan, talk to two or three mortgage loan brokers to try to find the best terms available for you.

Finally allow yourself as much time as possible. If you know that  you are probably going to need to borrow money 6 month from now, don't wait for month before exploring your options. The major reason people want the hard  money loan and look for hard money lender is that they need the money immediately.

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