Have bad credit, but need a loan? No problem. There are lenders that can assist. All lenders do not abide by the good credit only rule. Actually, some lenders do not look at credit at all for determining approval.
Tips on Hard Money Loans
Fast cash lenders do look at the credit of the client. However, it isn’t to decide whether they will be approved. During the application process a couple of those questions are “How much are asking for?” And “What are you using for collateral?”
After these questions are answered the lender now has a better view of the situation. For example, the customer may not need as much as the lender may think to renovate the property. Yes, the lender provides the money for the customer to buy the home, but then the home must be fixed up. The customer needs to decide how much will be needed to renovate the place.
As for collateral, private lenders are not as strict when it comes to sticking to the rules. Whereas traditional mortgage lenders will only qualify only real estate property to be used as collateral. Private lenders in most cases will use whatever collateral is available. Some will use retirement funds, boats or businesses.
The customer needs to realize that by using the business as collateral, they could lose it. Putting something up for collateral should be done only after much consideration. The amount of the collateral must amount to the total of the loan. This evaluation is what the lender will use to figure out whether or not to approve the loan.
In most cases, if the lender can not come up with the amount of the collateral, the application will not move forward. The applicant should keep in mind, a down payment may still be applied, though the collateral was sufficient. The down payment could be around 30% of the total. It could be less, as low as 10%.
The hard cash lender will decide on the amount of the down payment by looking at the applicants financial history. If the score is very low, for example 500, the down payment may end up being 30% of the amount. However, if the applicants score is 700, along with no bankruptcies or foreclosures, the down payment could be very low. There are cases where the applicant is not charged a down payment at all, but this is typical.
When processing the application, the private lender will usually have all the paperwork finished within 2 weeks. With traditional banks the process could take up to 3 months. This would frustrate many applicants. The majority of applicants that use hard cash loans are property owners and their time is valuable. At Chattanooga hard money lenders processing the paperwork is done as quickly as possible for the convenience of the applicant.
If the property owner has a set schedule to begin renovating the property, a 3 month wait could get them behind. Property owners will look at the amount of time it will take to fix-up the place. Once it is completely renovated, the property can now be sold. So, the sooner the paperwork is processed the sooner the applicant can get to work.
When fixing up the property, the owner needs to be aware of the time. As soon as the home is renovated, the owner must begin to put out ads to sell the property. Selling the property could take longer than expected. So, the sooner the home is renovated the better. At chattanooga hard money lenders they recognize how difficult it can be to sell a property quickly.
Once the applicant has sold the property, they can then pay back the lender. The lender and the applicant have already settled upon a date, in which the payment must be paid back. Property owners try to keep an eye on this date, so they do not get behind.