What are consequences of defaulting on hard money mortgage?
Failing to meet your hard money mortgage loan obligations can affect you financially.last updated Wednesday, May 17, 2023
#Hard Money Mortgage #Down payment Loss
| John Burson | Subscribe |

CONTENTS
Compared to traditional mortgages, hard money mortgages fall into ‘high-risk’ loans. Often, the security offered is usually distressed land, such as a parcel in a short sale position or foreclosure. The hard money mortgage is also offered with a lower LTV (loan to value) ratio when compared to conventional mortgages, which can go up to 90 percent of the home’s value. Failing to meet your hard money mortgage loan obligations can affect you financially.
Asset Loss
Defaulting on a loan when you have a hard money mortgage increases your risk of losing collateral assets. Every default notice comes after several delinquency notices, with the opportunity to respond. The only problem is that conventional lenders are more understanding than hard money lenders. Hard money comes from high-risk financiers who risk their money to give individuals with bad credit loans. This often leads them to become more aggressive toward defaulters, as they have little interest in allowing you to restore the loan.
Down Payment Loss
In a hard money loan situation, you give up a down payment of between 30 and 40 percent. Thus, lenders act fast because they have less risk and will often immediately sell your property in foreclosure. In such cases, the lenders can easily ask for between 60 and 70 percent of the home’s value to recover their money. On the contrary, a bank will often sell your property for at least 80 percent of its value, plus any expenses spent trying to sell it; hard money lenders capitalize on your default.
Bad Credit
People who go to hard money lenders often have bad credit as they have previously suffered from bankruptcy or foreclosure. If you are such a borrower, a second default means you destroy your chances of accessing any loan or mortgage from traditional institutions and hard money lenders in the future, including minor credit card and automobile loans. In such situations, you may have to operate on a ‘cash only’ basis, forcing you to rely on your savings for huge purchases, which limits your ability to build equity.
Our Platforms
Investment Opportunities Platform: Real estate investment platform
Investment strategies: real estate investment strategies.
Investments knowledge platform: Real Estate Investor Magazine.
Learn more about Real Estate Private Equity.
Subscribe to Paperfree Magazine
Free Paperfree Concierge Service
Paperfree Concierge
Get dedicated service, from finding the right information to complex investment challenges.

More Investment Opportunities

MVA2 is multifamily investing fund was designed to drive capital growth
MVA2, Multifamily Value Add Fund invests in value add investment opportunities across USA markets.
![[closed] MFF2, Multifamily Florida Fund 2](https://img.paperfree.com/fit-in/345x194/file_paperfree_144_2023-5-5-36-10-p_facebook-cropper.jpg)
MFF2, Multifamily Florida Fund [closed]
MFF2 is a real estate investment fund opened for passive real estate investors seeking a risk-adjusted return on investment alongside social impact.
![[closed] CMF. Cedar Multifamily Fund](https://img.paperfree.com/fit-in/345x194/file_paperfree_144_2020-8-21-17-10-p_facebook-cropper.jpg)
CMF. Cedar Multifamily
CMF is Cedar Multifamily is a privately-held acquisition, development, construction management, and asset management firm specializing in opportunistic and undervalued multifamily assets in markets across the United States.

SHF1. Investing in senior housing to drive capital growth
SHF1 is senior housing f und invests in senior housing properties across US markets.

BTRF2, Build to rent fund to drive capital growth.
Fund is investing in build to rent investment projects located in Florida Market to drive capital growth for passive investors.

multifamily fund
Multifamily funds have one of the highest average annual returns of all real estate investments. Find private and public multifamily investment funds below.