EXIT STRATEGY FOR BORROWERS GETTING HARD MONEY LOANS

Hard money mortgages can be a great temporary solution for borrowers, when other options are not available. A hard money loan will typically last only last 1 to 3 years in most cases. In all cases, in order to achieve the loan, the borrow must write a letter to the lender and broker explaining their exit strategy to pay off the lender by the end of the term. Thus, borrowers must have a reasonable and viable exit strategy in order to obtain loan. Here are a few potential exit strategies to consider. 1. Traditional Mortgage Ultimately, the main goal should be to locate long-term financing for the property, if the goal is to stay after the end of the term. A hard money mortgage is never meant to be a permanent solution, but it can buy time to find a traditional mortgage or repair credit or income faults. With 2 to 3 years of good income and credit, most borrowers should have enough to be able to get approved for a new conventional bank loan. 2. Selling the House Another good option to consider is selling the house. It could be a good market climate or crossroads time in the borrower’s life to unload the house and move on with life. If this is the case, the hard money loan should provide enough time to sell the house at a peak price. It will also again provide time to rehab the house or borrower’s credit, so that the next home purchase will be with several years of clean credit or stronger tax returns. 3. Another Hard Money Loan One of the last options that you have is to refinance with a different hard money loan. This is by far the least attractive solution, but it will help avoid foreclosure. The existing lender may extend, but the borrower may very well have to find a different hard money lender to work. Keep in mind that this is another temporary solution, and one that does not always work. If the value of the property declines, a hard money loan may not be possible. So, while it may be available, it may not be realistic. If the exit strategy is not viable enough for the lender, the loan will be declined. Need more information about Private Loans? Need info about hard money? We have California Hard Money. We do owner-occupied hard money loans as well as many others. Many of our loans are Equity based Lending Loans. Please call us at (760) 845-9035. Cushner Capital Group.