Hard money loans are a type of loans that individuals obtain from someone other than a conventional mortgage lender. Hard money loans can be incredibly beneficial for some people. However, not everyone can get a hard money loan.
Following are a few reasons why individuals may NOT be eligible for hard money loans:
1. Not enough down payment
One of the most common reasons for being rejected from getting a hard money loan is if the borrower doesn’t have enough funds to make a down payment for the purchase of his/her new property. Without the ability to make an adequate down payment, the odds are that the borrower may not be eligible for the loan.
Private money lenders are often known to turn down inexperienced investors. This is normally because the lender is trying to avoid making serious mistakes which may lead to a financial collapse. Borrowers with real estate investment experience are aware that deals without compensation on the lender’s end won’t be financed.
3. Inability to make the monthly payments
When a lender is considering whether to approve the borrower’s loan, the lender will initially determine if the borrower is able to make the monthly payments. The best way for the borrower to demonstrate that they can make the payments is by having sufficient income or funds that would be able to cover the monthly costs.
4. No proper exit strategy
Hard money lenders are usually done on a short-term basis with a payback period of around 3 years. Since the timeline period for the payment is short-term, the lender may require the borrower to make a large payment at the end of the term. For the loan to be successful, there should be a proper exit strategy in place. At the beginning of the loan process, the lender normally asks the borrower what their exit strategy would be.
If a borrower is eligible to obtain their hard money, they would have nothing to worry about. The next step would be to find the best firm to issue hard money loans. If you’re looking for the most reliable Evansville, IN Money Loans Leanders for your private money lending options, BridgeWell Capital is the place for you. BridgeWell guarantees client satisfaction with the maximum efficiency and the best services in the town.