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In the current era of COVID-19, many families and organizations are under a great deal of financial stress. The continuing deterioration of the economy is making it hard for many people to make ends meet. Businesses and community organizations are also suffering because of a decrease in funding or profits. Here are five financing tricks that you can employ to ease your family stress.
Hard Money Lending
Many successful investors have turned to hard money lending for their financing needs. Hard money lenders work in the private mortgage market and operate by lending their cash to investors in exchange for higher interest rates that couple with a payback period that is shorter in duration than a conventional type of loan. When using this type of loan, you will enjoy less strict financing and repayment requirements. Because there is less red tape to deal with, the approval process may also be shorter, giving you quick access to the money. The best place to look for hard money lenders is through local investment clubs or by simply asking around your friend groups.
Lean Into Your Local Credit Union
Many people turn to local banks for funding without even considering the cost savings that may be available through a smaller credit union. Because credit unions do not operate to make a profit, you may find more favorable rates for various financing bids. There will be trade-offs for these low rates, making it important that you understand what you are getting into. This makes it important that you identify what are the most important aspects of the funding to you. For example, are the higher fees of a credit union an acceptable trade-off to enjoy lower interest rates? Only you can decide. By thinking outside of the box, you will discover loads of ways that you can finance the projects that are important to you.
Peer to Peer Lending
With the advent of crowdfunding has come the prevalence of peer to peer lending. This practice has come into prominence over the last few years as many savvy real estate professionals have used the lending process to finance deals. Known as P2P lending, this investment practice pools groups of people together in an online format to pitch in money until the desired sum is reached and the deal has the financing that it needs to proceed. The benefit to the investors is the principal and interest they receive back in return. This type of creative financing enables people with limited monetary resources to try their hands with real estate while also rewarding those willing to fund these projects.
If your family started your own religious organization, you would be wise to check out specific forms of church financing. This type of financing is a commercial loan designated to be used by religious organizations. Because church organizations do not usually qualify for traditional small business loans, this type of funding can be an invaluable resource to groups who are short on cash. An added benefit of this type of financing is the flexibility that it provides the borrower. Under a conventional loan, your property or assets will likely be seized if you fall behind on your payments. A church-specific loan is generally more forgiving and will try to help you work through the payments in a way that is agreeable to all parties involved.
Tap Into Your Retirement Savings
While this is not a good idea for everyone, your current financial situation may make it acceptable to tap into your retirement savings for some types of purchases. These types of borrowing measures usually come with expensive repayment terms and high interest rates that make it cost-prohibitive. However, many IRAs contain a clause that allows you to borrow up to $10,000 to finance the purchase of a home without being on the hook for the typical 10% penalty fee or any other tax implications. This makes this a solid idea if you need the extra cash for a primary home purchase and you are not near the retirement age. As with all decisions regarding your retirement savings, it is important that you consider a variety of factors before making the decision to leverage this cash.
By making the best financial decisions for your family, you can relieve unnecessary stress. Be sure to ask a professional if you have any questions on what will be the right choices for you and your situation.