How to Find a Lender to Refinance Your Property

4. Loans From Friends or Family Many people believe this is the most

“expensive” loan of all. Asking for money from a friend or family member almost always comes with unexpected baggage. But this may be your only viable fi nancing option, particularly if your LTV and credit score are insufficient for normal lenders. If you go this route, it is your responsibility to make the business arrangement work out. In other words, don’t borrow from your friends or family if you don’t truthfully believe you can pay them back.

If you approach a friend or relative to request a loan to stop the foreclosure, offer them interest on their money even if they say it isn’t necessary. Make an offer they can’t refuse and one you can afford. Knowing what you now know about the range of lenders, you can off er a rate of interest that, while lower than what you would have been charged in the marketplace, would still be higher then what they would receive if they had invested their money in a certifi cate of deposit or money market fund.

Finally, formalize your agreement by filling-out a mortgage or promissory note, and deed of trust which contains all of the terms of the loan. In addition, record the mortgage (or a deed of trust) in the county recorder’s offi ce.

F. How to Find a Lender to

1. Commercial Banks

Increasingly, commercial banks have become major real estate-based lenders.

More recently, they have actively encouraged home equity loans.

The range of a bank’s real estate based loan programs will vary. With the exception of hard money loans, large metropolitan banks usually have all the loan products you will need: home equity loans and conventional loans.

Smaller banks, on the other hand, may not write conventional loans.

Further, commercial banks are as interested in home equity loans as conventional loans, and will actively compete to get home equity loan business. A home equity loan is

profitable to a commercial bank because of its low service costs--there is li le for the bank to do aer it sets up an equity loan. Banks eager to give home equity loans advertise their rates in the Sunday newspapers. You can also surf the internet, or shop-around by telephoning major banks in your area (check the yellow pages). Ask for their current interest rates, points, application fees, and other charges for conventional and home equity loans.

2. Savings Banks

Because of the 1980’s debacle in the savings and loan industry (S&Ls were permied to expand into many unrelated activities, and many of them met financial disaster), the vast majority of savings and loan associations have distanced themselves from that notoriety. They’ve achieved this by changing their names to

“savings banks,” the new buzzword in the industry. While you may be concerned about the fi nancial strength of an institution when you are a saver, you personally need not worry as a borrower. Aer all, you have their money; they don’t have yours.

Savings banks continue to write the majority of Americans’ conventional home loans, so it is only natural that borrowers would also turn to these institutions when seeking home equity loans. The positive result is that savings banks process loans faster than commercial banks, regardless of whether it is a conventional loan or a home equity loan. Savings banks, being real estate specialists, tend to be more aggressive in going a er conventional and home equity loans than commercial banks. Similar to commercial banks, savings banks do not provide hard money loans.

But in this era of deregulation in the

lending industry, it has become virtually

impossible to distinguish savings banks

from commercial banks. So the decision

really comes down to investigating

which institution offers you the best

rates and terms. Shop around before

you decide.

3. Credit Unions

Credit unions are sleepers among real property lending possibilities because few people think of them as potential lending sources. Credit unions are financial institutions established for the benefi t of their members, who open accounts and borrow money. In effect, the members borrow from each other. Being non-profi t cooperative institutions, credit unions’ interest rates tend to be one to two points below rates charged by commercial banks and savings banks. However, their services are available to members only. They generally don’t advertise, which helps keep their costs down.

Credit unions are authorized to grant loans secured by real property.

In fact, the conventional real estate loan business has become one of credit unions’ largest activities. Credit unions have also expanded into home equity loans in recent years.

If you do not belong to a credit union, don’t despair. There may still be time if the foreclosure clock has not ticked too far along. Check out whether you are eligible to join the credit union of some group with which you are already associated. Ask your employer, government bureau, educational

institution, or cooperative association whether they are affi liated with a credit union. You can find a list of credit unions by searching the internet, or in your local yellow pages under “credit unions.” Call them and ask about their eligibility requirements. You maybe pleasantly surprised how easy some of them are to join.

4. Mortgage Brokers

Mortgage brokers are agents that deal with many different lenders on a wholesale basis. They act as “money merchants,” arranging loans for borrowers by scouring the country for the best loan programs and best interest rates.

Mortgage brokers can find you a loan quickly. Mortgage brokers provide a needed service to homeowners in foreclosure because they can fi nd obscure lenders and loan programs that are more liberal in their guidelines, credit scores, and loan-to-value ratios.

Another advantage of using a mortgage broker is that they can typically process loans faster, and push lenders to fund your loan as soon as possible. Another advantage is that mortgage brokers are in constant contact with various lenders and know which ones have money to lend people in foreclosure and the terms. Keep this in mind if the foreclosure clock is running out of time.

You can find local mortgage brokers by asking real estate agents, searching the internet, or looking in your local yellow pages.

5. Life Insurance Companies

Life insurance companies invest heavily in commercial real estate fi nancing.

So if you own commercial property in foreclosure, you should check with life insurance companies. A list of insurance companies is easy to locate on the internet, or in your local yellow pages under “life insurance.”

In contrast, if you own residential

property, either a single- family

residence, condominium, or a 1-4 unit

insurance company is probably a waste of your precious time. Life insurance companies rarely deal directly with homeowners.

6. Brokerage Firms

Deregulation has opened the “fi nancial services” floodgates to stock brokerage firms to participate in real estate loans.

Today, most full-service brokerage firms have a wide assortment of loan programs, including conventional loans and home equity loans. Although they are still small players in the refi nancing field, there are currently several major brokerage firms in the United States (with local offices near you) as well as many small brokerage houses in your city that offer real estate loans. Search the internet or look in your local yellow pages under “stockbrokers.”

7. Hard Money Lenders Hard money lenders tend to be

individuals or small companies that loan only on local properties that they can keep a close eye on. The easiest way to find hard money lenders is the Sunday classified real estate section of your local newspaper. Hard money lenders’

advertisements will scream out at you:

“no qualifying,” “easy cash,” “no credit required,” “cash within days.”

Then again, you may not need to find hard money lenders--they will fi nd you! Hard money lenders typically subscribe to special foreclosure listing services that give them a daily list of properties in foreclosure. These lenders then send you a le er or promotional mailer advertising their loan services.

In fact, if you’ve already been served with a complaint or received a Notice

of Default, you have probably been flooded with these advertisements.

(Hint: proceed with caution, for reasons discussed in Section E3, above.)

8. Individuals and Real Estate Investors

The problem with individuals who loan money as a living (not family and friends) is that they tend to charge a higher rate of interest than commercial banks or savings banks. Nevertheless, these individuals may be an excellent sources of home equity loans, provided the interest rates and fees are acceptable to you.

It may be diffi cult to distinguish

between an individual investor and a

hard money lender, especially if the

proposed interest rate is incredibly

high. (If you are confronted with this

dilemma, you can assume you are

dealing with a hard money lender,

regardless of whether it is an individual

or a company.)