Private Lending to get our of a sticky situation??
Hello all,
Well, this is quite a personal dilemma I find myself in. Me and my girlfriend are both new to REI, me as a contractor with a few potential business partners, and her a working mother taking real estate classes. We both work very hard but have had our fair share of ups and downs. The latest came when we thought we were doing everything right, so looking for some advice and help.
The short story is my girlfriend relies on child support for making ends meet. We were looking to cut a few bills and went to trade in her suburban for something more practical and cheaper. The credit app came back with a huge shocker. She was behind on her mortgage. Her x has not been making mortgage payments for the last several months. We had been planning to fix up her home over the next year and do a cash out refi and take him off the mortgage and get him out of the picture. Well, we all know what this does, and it really hurts our plans. And as long as he is in the picture of owning the home, and being on the mortgage, we are really at his mercy.
What I'm wondering is if looking for private financing would be a better use of our resources. Instead of using our money to catch up and be in the same situation, would it not be better to use the cash we can save to help attain private financing. Something I envision would be finding private lending to pay off the entirety of the mortgage, use what we can to put towards the cost of that make payments directly to the private lender and refi later, because with the recent payment history, there is no way her mortgage company will do a refi with her only, and a new mortgage is impossible at this point because of what has happened to her credit with this.
Any advice is greatly appreciated.
Notes, her current mortgage is a 15 year conventional at 4.9%. It would not be too hard to catch up, but if we went private lender route at a higher % rate for a longer term, with refi @12-18 months, I think we would be money ahead and that would get him off the mortgage as well as the title. That to me is worth paying a premium for. If the interest went up to 7.9 plus 1 point, the payments would still be less than current, there is equity in the home (not much) and over the next year, we will be doing some major value adding remodeling that I do myself, such as cabinetry, flooring, granite, landscaping, finish work. It seems logical to me that this would be a good deal to us and the lender, and it's too bad most banks cant see that.
Am I crazy or is this something possible with a private lender.