Let’s face it. Life happens.
She can throw you a curve-ball every once in a while.
So what can you do when your ‘Plan A’ takes a financial detour?
For this blog post I’m going to cover just one possible financing option that may or may not fit the bill for your current situation and future goals.
This short-term financing tool is an equity-based real estate loan that is funded by a private individual rather than an institutional mortgage lender or bank.
These are known as private money loans.
The 8 scenarios below are real life scenarios that I’ve received from real people over the past year. My hope is that you’ll get a better understanding of where people are coming from when looking into non-traditional mortgage loans to help them move on to the next step in life.
You will notice that many of these people have good incomes and have already paid off their mortgages. They simply needed access to short-term cash to solve immediate needs.
Note: The scenarios have been edited and modified for easier reading and informational purposes. The main content is used to give you the most realistic example of the reasons a private money loan might be the right solution for the right situation. The identities are obviously removed for privacy.
8 Financing Scenarios That a Private Money Loan Could Solve
1. I hope to sell my house in the short term, within year, but need money immediately for fix-up, taxes and other expenses. The house has no mortgage on it.
2. I had to take a year off to care for my son who has now recovered from cancer. The only way to recover financially now is to consolidate and fix my credit score. Things were bad while he was sick.
I have had a good paying job for 15+ years and have been with my current employer 7 years. I have stable income – but lousy credit.
I would like to consolidate my car loans, a couple of collection accounts, and MEDICAL bills! I also need cash for a new roof.
I will need a 2nd mortgage to do this, then in 3-5 years I can refinance and will be in a better position overall.
3. I am going to use the money [the new loan] to save a commercial piece of property that is going to be tax defaulted.
4. My mother occupies this home. She is very ill and requires 24 hour care, but her desire is to stay in her home.
We are looking at borrowing against the value of the home to help with her large medical expenses.There is no existing mortgage on the home so I believe the ideal scenario would be a private mortgage.
5. I own my property outright and am wanting to borrow some money to pay off some bills and help with funding my daughter’s college expenses. I do not have a mortgage. My credit is poor: upper 500’s.
6. We are looking to move into a bigger house so my ill father-in-law can live with us.
I am a teacher and my husband is a manager of a shipping company. Very stable, but have low credit scores because of the time I took off to raise our kids and also a small business that I ran during that time.
7. We lived in the [subject] house for the last two years. The house was sold, so we moved out and rented another place to live in. However, the deal fell through due to the buyer’s loan not being approved.
We have a lease at our new place, so we want to rehab the other [subject] property so that we can rent it out or sell it. (If we get the right price.)
We owe zero on the house but I have a Franchise Tax Board lien of $4,300, water lien of $120, and past due property tax of $2,800. I am looking to get this done ASAP.
8. I am seeking a property tax loan for defaulted taxes to avoid losing our home to a property tax auction. This will allow us to keep our home and pay off the tax.
We experienced numerous setbacks and my family has had some serious medical issues. We only want the opportunity to keep our home and hope you can be of help to us. There are no liens [mortgage loans] on this property.
Do any of these scenarios sound familiar? Or perhaps you know someone in a similar situation?
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