The recession that hit in 2008 was unlike anything the world has ever seen. There have been worse economic recessions in individual countries (the Great Depression comes to mind here in the States), but the interconnectedness of the global market today made this recession something unique. The economies of the world’s countries today are connected in ways that weren’t the case even a half century ago, so if something goes wrong with one of the biggest markets in the world, the impacts are felt across the globe. Many European economies are still recovering from the recession, and some parts of the world might not be the same for many decades to come. It was a unique economic catastrophe, and it had real impacts on people’s lives.
Here in the States, many things in the financial industry changed after 2008. Tougher regulations were imposed on banks and financial institutions, and new laws sprang up to help hold them accountable so things like what happened in the early 2000’s wouldn’t happen again. One of the smaller changes that occurred as a result of these restrictions on and changes withing banking institutions was that bank loans became much harder to get. Part of what led to the financial recession was that banks were handing out all kinds of loans to people who never had any ability to pay them back. People were buying homes that they couldn’t afford because they didn’t understand loans very well and because banks were telling them that was the amount they were approved for. What ended up happening is people stopped paying their loans because they couldn’t afford them, banks foreclosed on their houses, and the entire housing economy came tumbling down.
Due to all of this, after 2008 banks got a lot more strict on who they would lend money to. It became much harder for those looking to buy homes, including the people who work in the real estate industry, to secure loans from banks. Thus, many borrowers, including those same real estate professionals, turned to private money loans. If the banks weren’t going to give them the money they needed to buy a house, then maybe a private money lender would. In many cases, private money lenders did come through, especially for real estate professionals. As long as those working in the real estate industry had enough assets, some skin in the game in the form of a down payment on the home, and a plan to pay the loan back quickly, private money lenders would give them the money that they needed.
Things are changing today, and banks are much more likely to give out loans than they were immediately after the recession. Still, private money lenders like Montegra Capital Resources are still being used today. Many real estate professionals realized that private money loans often worked better than loans from banks, and since there is still a lot of red tape associated with bank lending, it sometimes makes more sense for them to turn to private money lenders.