Foreclosure is becoming an unfortunate reality for many homeowners in recent months. Not only can it leave you without a home, it can ruin your credit and cause a variety of other devastating financial problems. Preventing foreclosure is always your best options, but most homeowners are not sure what to do or where to begin saving their homes.

As with many things in life, knowledge is your best weapon if you are hoping to avoid foreclosure. A variety of remedies exist to stop your foreclosure and one of the most common is to seek foreclosure lending services. Refinancing your mortgage is an ideal option if you initially took an adjustable rate mortgage (ARM) or interest only loan only to find that the payments have ballooned out of your ability to keep up.

Foreclosure refinance loans are a good choice if you have some equity in your home and a good history of paying your mortgage on time before financial difficulty set in. The same bank that holds your note may be willing to refinance the loan to a fixed rate loan, especially if it can avoid foreclosure and keep you (the customer) happily paying on the loan.

Thats another important thing to remember - the bank does not want to go through the foreclosure any more than you want them to. Banks loose considerable amounts of time and money on each foreclosure. This common goal makes it practical for you to discuss problems with your bank so that you can work out a mutually agreeable solution.

If your bank won’t help you with a refinance, there is a federal program known as the FHASecure program that helps match homeowners with lenders who refinance ARM’s to fixed rate mortgages. While you will still have to qualify for a loan, this program can be helpful for the referrals alone.

Foreclosure lending options are an ideal way to stop foreclosure and save your home with a new affordable loan. Remember that it is best to take fast action if you find yourself unable to make payments on your mortgage. The earlier that you seek help, the better the chances that something can be done to correct the situation.

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If you are a real estate investor in search of capital and you are frustrated with banks and hard money lenders you may find borrowing from people through private lending a much better option. This type of lending really attracts many real estate investors as the advantages of private lending over banks and hard money lending includes faster turnaround and no personal credit checks.

Private lending involves borrowing from people, not banks or hard money lenders, for the purpose of purchasing real estate investments with the pledge of the real estate as a security for the loan. This is one of the best ways for real estate investors to preserve their cash and tap into the leverage of other people’s money.

You need to have a fair amount of knowledge about private lending before using this type of borrowing. You need to make all the necessary preparations with regards to the deal and make sure you are buying at the right price to achieve success. In this type of lending, private lenders may invest their money in other options, so to attract private lenders you must be offering safe and secure investment at high interest rates.

Private lending allows you, the real estate investor, to control the terms and conditions that you borrow money at from private lenders. You can go for short terms loans of less than one year or as long as ten years depending on your goals and plans for each piece of real estate you purchase. You can also pay different rates of interest depending on a number of factors including how much they borrow and for how long. The important point is you control how the deal works not a bank or hard money lender.

Private lending offers the lenders the freedom to increase or decrease the size of their investment in order to suit their needs and comfort level. In other words, there are lots of private lenders out there looking to make high interest loans secured by real estate and you just need to go find them and start borrowing to buy real estate.

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To say that the US mortgage market has changed in the last year is a huge understatement! We have seen the end of easy money financing and it will be some time before we see sub-prime loans, no-doc loans or hard money lending in many areas. Even traditional mortgage lending will require much higher credit standards and much larger down payments for real estate investors.

So how are you going to fund your real estate deals in this new environment?

Few individuals have enough of their own cash to purchase real estate investments, and those who do, generally know better than to use their own cash in their real estate investing business. If you are a serious real estate investor you need cash to buy houses.

It is a common story for new real estate investors to start out with lots of cash and little experience, only to lose all their cash in the learning process and have to learn how to do things the right way the second time around.

Even if you have a flush bank account or a home equity line of credit you’ll eventually run out of money and need a consistent and dependable source of new money to buy real estate investments.

So how do you get this cash?

You can go to a bank and try to qualify for a loan and then wait to be approved. If approved, you will need to put up 20% to 30% down payment for each and every deal and pay all the bank’s closing cost fees. How long will your cash last doing that?!

Or, you can go to a hard money lender, but they will only lend you 65% loan-to-value (LTV) and you must fund the balance with your personal funds. Not to mention, hard money lenders charge 5 to 10 points as an upfront fee. Ouch!

So what is the answer? The answer is using private lenders to fund your real estate deals. Private lending is a consistent source of funds to purchase real estate deals that you can go back to again and again and again. In fact, the more you use, the more will become available as you develop relationships with more private lenders.

What is private lending and who are private lenders?

The definition of a private lender is an individual that you can negotiate directly with on a personal basis to borrow money for real estate investments. The money can be used to purchase rental real estate investments or to supplement funds borrowed from a bank to cover down payments.

Private lenders come from all walks of life and may not know the first thing about the real estate business. But what they do have is extra cash or assets that they can invest in your real estate deals. These individuals are generally middle class people, who have some extra funds to lend. They can be retired business people, corporate executives, professionals such as doctors, lawyers, or business owners or even blue collar workers.

Private lenders are looking for returns substantially above the 3% to 5% they get at the bank with CD’s or money markets. Most private lenders are looking for investment returns in the 9% to 15% range and secured by local rental real estate.

So the concept of “private lending” can be defined as the process of borrowing real estate investment funds from private individuals at rates higher than these lenders can normally achieve using conventional investing institutions like banks and conventional investment vehicles like stocks, bonds, CDs, or money markets and secured by local rental real estate.

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