Private Individuals

Most loan funds are from personal or business savings. Some loan arrangers have sought investors owning homes who had very low debt-to-equity ratios as well as those having debt free residences. By refinancing, they are often able to borrow at a much lower interest rate than they can loan their money at. They are thus able to make money on this interest differential by trading on their equity. Even if their loans are well secured, the investor in such a situation is placed at risk. Should the lien that they hold go into default, they may not have the funds to make their own mortgage payments, which would place their home at risk of foreclosure.

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The 90-10 Financial Secret

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