Private Lending, REI Blog

What About Private Lending?

If you have tried to get your mortgage note modified and opted to short sell the family home, this may be for you.

In the case of a short sale two facts remain constant.  First, you will sustain damage to your credit rating for at least 24 months.  Second, you will have to move.

There has traditionally been a third inevitability and that is that you would become a renter again.  The latter is least preferable as it means the loss of some distinct tax advantages that come with home ownership.  These will be discussed in a later article.

In the meantime, the question is whether it is possible to maintain homeownership status with severely handicapped credit?  The answer is: “possibly.”  With private money many doors can open up to families with a solid household income.

Financial loans are financial opportunities in disguise.  It can provide the private lender a great return on their money while securing their funds with a note in first position on your new home at a loan-to-value of 65-70%.  In this down market property values present a terrific opportunity for securing retirement funds as well.  Free information on that subject can be obtained by calling 1-888-380-INVEST and requesting a CD on self-directed IRAs.

Private funds also allow for flexible terms.  Maybe your “sweat equity” and a partner’s cash can make a winning combination together.  Either way, the sky’s the limit.

Don’t underestimate the power of the human heart.  People have a nearly inborn need to feel as though they are making a difference in the lives of others…especially those whom they care about.  You may be surprised to find others are more than a little enthusiastic to help you realize your dreams.  Why not share these hopes and dreams with those in your life?  It may prove to be the best financial move you make this year!

Be prepared to provide the “complete picture” for any prospective investor.  Make sure you have accurate numbers and all available facts about the new property.  This will make their decision much easier….and you look better.  As with any business transaction:  Put it in writing!  Provide your lender with a Note and Deed of Trust and have it recorded with the county.  It is best, too, to have your lender named as “additional insured” to protect them against any catastrophic losses.

In conclusion, as the banks get weirder and weirder, it will become increasingly more necessary to get creative with financing.  Private money is a great vehicle to make deals happen.  You will likely pay a higher rate of interest but it may make the difference between having the deal and not having it.  Here’s to home ownership!