Hard money, sub prime lenders

[Miknan]

Anyone ever use them or have any idea on the fees, interest rates, or terms? We are in the process of ch 7 and including the house. There are amazingly few rentals anywhere in the suburbs and I don't want to move with my 3 little girls into some pretty rough neighborhoods where it seems is the only place I can find rental houses. I'm raiding my 401k to get about $40k for a downpayment.

[Flamingo]

I've never used them but you need to be extremely careful as to their tactics and to any paperwork given to you, expect high interest rates and be careful of additional fees and small print. It's best to have an attorney review any and all paperwork before you sign anything and before you raid your 401(k) for money for anything.

[sunshinepa]

May I ask, is there a reason you want to include the house and then raid your 401K to buy another? Would it not be better to just NOT reaffirm your current house and stay and pay? Just curious.

[Miknan]

We would prefer to stay in our current house but we are way upside down in it (and now 3 months behind as we stopped paying per our attorney). We also have a $24k second loan. The new house payment will be around $300 cheaper and no second mortgage payment either. I've racked my brains and have read a lot about trying to use that same $40k after the BK and trying to work out a way to save this house but it seems a remod would be unlikely. A builder may do a 3 year land contract for me at 7% but i have to say im a bit afraid of what happens after three years if i cant get a loan. Plus this builder knows my story and I have no leverage in negotiating a good price. Im going to work hard on rebuilding my credit but you never know. Suggestions?

[sunshinepa]

Wow, that's a tough one, makes me feel fortunate I can stay and pay as I'm not behind or have a second. Have you thought about contacting your lender? Perhaps if you paid the 2nd off with the 401K money and then tried to work with the 1st with the remaining money? Just a thought.

Since you are still in BK process, I think it would be really tough to get a new loan. Been reading that it generally takes at least 2 years.

I wish you luck.

[Miknan]

Sunshine, I'm glad you can stay and pay. The biggest stressor about this whole BK is where are we going to live after. Where do families go to rent? It's just amazing that besides some apt complexes there is nowhere to rent around here. Were you discharged yet? Good luck.

[df04527]

Hard money lenders have STIFF fees and very very high interest rates. Best advice if you use them is what Flamingo said -- before you sign anything - have a real estate attorney review. Going hard money is last resort. I also echo trying to workout something with current lender if possible.

[Miknan]

Thanks everyone for the info. Hard money lenders must not be a realistic option since I can't find anyone else on the Internet doing that. I think my best bet is this builder but I will call Wells Fargo after discharge, or should I call now? I've read since it's in BK now they won't talk to you and mods are voided.

[nodebtnomore]

Hard money lenders will charge a "funding fee" of about $4000 on a $150000 house. Expect a interest rate of 12-16%. Short term loan ie; 3-5 years. They will do a VERY conservative appraisal on the property and lend you maximum 60% of their assessed value.

Good option if you are looking for short term until you can refi.

Definitely get a real estate attorney to review contracts and documents before signing ANYTHING.

[sunshinepa]

Sunshine, I'm glad you can stay and pay. The biggest stressor about this whole BK is where are we going to live after. Where do families go to rent? It's just amazing that besides some apt complexes there is nowhere to rent around here. Were you discharged yet? Good luck.

Thanks Miknan, it is a relief as I love my little house and the neighbors are all like family. It's also a relief knowing I can walk away if it ever gets to be too much. I am one of the lucky ones though, I get a good retirement and next Sept will be getting my SS (unless they change something). Without the CC payments, I am comfortable so I feel really blessed.

Yes, got my discharge emailed to me today.

I hope this all works out for you, it would be nice if WF would work with you and let you stay in your current home.

[dspii]

Stay and Pay or quit paying and live rent free for a while.....based on where you live it could take a couple years before you have to leave. Leave the hard money alone....best advice ever!

To find another home, I can assure you there are plenty of people willing to do lease options, rent-to-owns or what have you. Unfortunately, you are going to need several years for your credit to heal. Look at For Sale by Owners, Rent to Owns, Owner Carry, Owner Financing or what ever.

I moved 2000 miles away, found a for sale by owner, inquired about a lease option and wella......we're in. In today's market, there are plenty of these option out there....you just have to look and be diligent. Be aware that you will likely not find your dream home....you will have to settle for less. Sorry, it sucks but it is going to take several years before you can buy legitimately.