Hard money loan??

[Rose Davis]

If one were to get a hard money loan for a flip and say the term is 5 months and the house doesnt sell, what happens if the borrower cannot pay the loan back? Does it go on credit? Will the lender take the property? Will the lender garnish wages?? What are the other cons other than high interest rate if you cant pay back?

[Abdel Martinez]

You could restructure the payment schedule on the note. The lender can foreclose on you, however you could simply add the arrearage to the principal balance and extend the term of the loan. This means the lender would be collecting interest on interest for the entire remainder of the loan. There are always ways to work it out if both sides. Just think creative financing but, don't make it a habit or your new normal.