Is credit important when getting a hard money loan?
That depends on the private money lender. Some Real Estate Investors only care about the property and its value. While others look at the credit. Also, the borrower’s ability to pay. And, how much the borrower earns, to ensure they could afford the payments.
At Taylor Made Lending, you are more than just a credit score number. When it comes to determining your credit, hard money lenders are more reasonable than traditional banks in their decision making.
Real Estate Investors
Many real estate investors use private hard money lenders to help fund real estate investments. Hard money lenders offer a substantial advantage over traditional banks. This is because of their ability to fund loans at a faster rate. In most cases, we can quickly fund within a week or less. The approval requirements are far less rigid. In most cases, credit scores do not affect an investor’s ability to qualify for a hard money loan.
Private hard money lenders require borrowers to use the investment property as collateral for loan approval. The value of the property is more important to lenders than the borrower’s credit score. Although credit scores play a small role in loan approval. Hard money lenders charge higher interest rates and fees for borrowers with less than perfect credit. Nevertheless, the amount of equity in the property is the primary factor for approval. Borrowers with bad credit, including foreclosures and defaults, qualify if they can prove the after repair value is worth more than the purchase price. Real estate investors with bad credit should outline a detailed plan for the investment property before applying for hard money loans.
This should include: How the borrower plans to pay off the loan. Investors plan to restore the property’s value. And, plan to market the property for immediate sale.