The Truth About Hard Money Loans Is About To Be Revealed
Many property owners don’t realize how different private lenders are from traditional mortgage lenders. The difference can be profound. One reason is because the private lenders loan out of their own money. So they would obviously have the luxury of being more lenient.
Secrets about Private Lenders
One difference between traditional mortgage lenders and private lenders is the variety of collateral that is acceptable. With traditional mortgage lenders only property real estate is accepted. Now, with private lenders they are generally open to different types of collateral.
For example, if a property owner has a lucrative business that they will like to use as security that is typically acceptable. Many applicants may not be aware of this. Also, most hard cash lenders, if the applicant feels confident in using their retirement funds as collateral, that is also an option. Basically, since the money used for the loan belongs to the lender, they are more open to leniency.
Boats are also acceptable, along with cars. As far as the private lender can reclaim his/her money from the items it is fine. Of course, the applicant will need the titles/proof of ownership. It will have to be shown that the items sufficiently cover the total amount of the loan. Being able to recover the money that was loaned is the end goal.
The amount of the loan given will be the total cost of the property. In most cases the applicant will also ask for the finances to cover the cost of the renovations. Renovating a property can be costly, and the extra money to fix the property is often needed. Kansas City hard money lenders are willing to work with their clients to make sure they succeed.
Loaning out the money to bring a home to complete renovation is something that these lenders are proud to do. The better the renovation, the better the community looks as a whole. Helping clients to do their best is an expected practice by most well-known private lenders.
Another thing that real estate agents may not be aware of is concerning credit checks. Many applicants assume that credit will be checked and the decision based off of that. That is not the case.
Yes, hard cash lenders do run the credit of each potential borrower, however the decision is not based off of that. Even if the credit score is very low, the application will not be denied. Kansas City hard money lenders make it a point to work with each applicant when it comes to their credit.
For example, if an applicant has a credit score that is below 500, that would be fine to move forward. When it comes to bankruptcies and foreclosures, the lender may require references. The references would have to speak upon the applicant’s good ability to be financially responsible. Too many negatives on the applicants history could cause the down payment to be higher.
A down payment has to be paid immediately. If the potential borrower can not pay the down payment, then the application may be denied. Normally, the down payment can be as high as 30% of the total loan. However, it can be as low as 10%. In most cases as long as the applicant has collateral and can pay the down payment the application will not be due denied.
And lastly, many property owners think the payment date can not be negotiated. The payment date can be negotiated. The date to pay back the loan should be a sensible one. If the property owner does not feel comfortable with the date, it would be in their best interest to change it to suit their business needs.