Get Your Hard Money Loan Approved

Many say that getting a loan from hard money lenders is not that difficult. If that is the case then how come when people face problems with the mortgage of their property they still end up in foreclosure? Does this mean that they were unable to obtain a hard money loan? You probably know that unlike loans from banks, loans from private money lenders have less than stringent requirements. For one your credit score is rarely a factor whether it is strong or weak. Your ability to pay is not an issue as well. For this type of loan what is important is that you have the right collateral. How do you ensure then that you are able to get one? Here are three simple steps on how to get your loan approved.

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• Get the right property. A hard money loan is given to a borrower who a property that can be used for business. You may have a property with a good price but the location in reality is not that good. Keep in mind that private money lenders implement what is known as a LTV or the loan-to-value ratio. Thus you may think that the property is worth $5 million but when a professional appraiser looks at it, he sees that it is located in a bad area so the appraised value drops down to $3 million. This means you can only get a loan of less than $2 million. While the lender may have the right to the property if you default, they also want that the property is profitable to them if they sell it.
• Plan your Exit. One of the difficult things about getting this type of loan is that the interest rate is a bit higher compared to banks. In addition the terms or length of the loan is shorter compared to others. Thus f you have a plan to repay the loan then your chances of getting approved becomes higher. Remember if you default on the loan, the lender gets your property. Don’t just focus on getting the actual loan. Plan ahead and see how you will be paying said loan.
• Be Active. Private money lenders want it to be shown that you are very interested in the loan. Even if you have a weak credit score or feel that you will be disapproved, show your enthusiasm. Submit the necessary documents on time. Make the necessary return calls. While hard money lenders are able to release financing faster, it still boils down to how fast and efficient you are during the application process.

While the lenders may have the capital to fund their operations, they don’t have an unlimited amount of it. Thus they will always enter into a deal were not only you will benefit but they are profitable as well. You should be able to get the money you need when you need it most. When applying for a hard money loan, the rule is actually simple: always come prepared.