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I'm the seller. The closing was next week. The inspection was done, but no appraisal yet.
They are putting down half, but they still couldn't get the conventional loan.
Then they call yesterday saying they are now doing "Hard Equity loan", but now they need to change the name of the buyer to some company name. They said something about investors joining into buy the house.
Someone came out to the house this week and took one picture of the house and left.
This sound funny to anyone?
1. why would they need investors if they're getting hard equity loan?
2. buyers are putting down half, but they're buying it under some company name?
3. As long as money goes into my account, who cares?
Scam?
My agent's working hard trying to get answers from them at the moment.
anyone ever go through something like this? ANything I should be alerted with?
A hard money loan is a private investor. Yes, it is normal for them to come out and look at the house. They need to verify that they are lending on a property that they can resell if needed.
Typically with hard money loans the investor holds the title in the name of the investment company in an agreement called a land sales contract. That way if the buyers miss payments, it is easy to foreclose and take back the property.
Here's the deal as I understand it from who I use for hard money. Investment properties are not subject to QM and ATR (ability to repay). The lender (Mr Hard Money) cannot be sued for giving the investor a loan they cannot qualify for. However, if the hard money is against a primary residence, very specific laws are in place to protect the borrower. I've seen this happen frequently for this reason.
It's easy to be alarmed, I get that, but I have seen this before. Photos of the home are far from unusual, many require an appraisal. It sounds like they are doing a shared equity loan. I hope every rock was turned over before signing on for this loan.
As long as you get your money, pay the realtor and your mortgage/tax share why worry??
I would be concerned about the money being ready to fund at closing--
Maybe they have lot to finish up to be ready
You won't be carrying any of the paper, will you? You'll get your money at closing?
You are worried about it, so have a good real estate lawyer go over the documents so that you know you are protected.
The buyer is taking the risk. You'll walk away with your cash and you are done with it. However, if that buyer is willing to borrow hard money to buy your place, I suspect that you are seriously under-priced, or else there is some sort of major development going into the neighborhood that you don't know about.
Or maybe your place is a fixer in serious need of repairs and not worth so much right now but will be worth much more with the right fix up.
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