Sometimes the credit score of an individual can stand in the way of them moving forward with needful projects. Some of these projects can be pretty important so it will be up to the person or company to find a way around it. One way would be to find other alternatives.
One alternative would be hard cash loans. With hard cash lenders the credit score of the applicant is not needed. Yes, the score is looked at, along with any bankruptcies, but it doesn’t affect the approval decision. This is good news for a lot of people.
Pros and Cons of Hard Money Loans
The question,”Well, then why even check it!” may pop up. And the answer to that is, the past financial history of a person helps the private lender to estimate the amount of the down payment. If the property owner has a score of 700 with no past foreclosures, the lender may only ask for 10% down of the entire loan. However, if the property owner’s credit score is 500 with 2 past foreclosures, the lender may require a whopping 30%.
What hard cash lenders do put a good amount of weight on is whether or not the individual had the necessary collateral. Collateral is very important in the hard cash industry. Without the right amount of collateral to put up, the loan can be rejected.
Sometimes a property owner can own a piece of property, but the total amount of the property just isn’t enough. Keep in mind hard cash lenders calculate the value of properties a little differently than other lenders. Real estate owners go to hard cash lenders to obtain the funds to first purchase the property and then second to renovate it. It costs money to fix up a property to make it sellable.
Private lenders would calculate the value of the home, as if it has already been completely renovated. This is a huge advantage for the property owner. The property is being calculated for more than what it’s worth. However, even though it is being calculated as such, more collateral may still be needed.
Traditional mortgage lenders will only use real estate property as collateral. It is not typical for them to use anything else. And it’s not up to the bank agent to decide, because it is not their money. With private lenders it is their money. so they are willing to accept whatever type of collateral they please. At El Paso hard money loan making it easier for the real estate owner is their motto.
Once the collateral situation has been cleared, the private lender will decide on a payment due date. This date should be decided by both the applicant and lender. However, too often it’s not done that way. In most cases, regardless of the inconvenience the applicant will accept. They’re kind of at the mercy of the lender.
So even if the property may need more than a year to get renovated, they will nevertheless accept the terms. They will have to hustle and get the job done. Especially if the real estate owner has quite a few other properties that he/she is working on. The job of renovating can be demanding. At El Paso hard money loan the customer comes first. They believe that it is important to work with property owners not against them.
If the property owner has a business relationship with the lender, perhaps changes can be made concerning the due date. But it will be up to the lender. The property owner should be sure that the deadline can be met, before signing on the dotted line. Once the paperwork has been signed the payment must be paid back, by that specific date.
Remember, it’s not a matter of cleaning up and renovating the property. It’s also a matter of selling the property. The property must be sold and the money must be in hand, in order to pay back the loan.
On too many occasions property owners will not have achieved their goals. In this case, a payment extension will be needed. Private lenders have the option of charging extra fees for situations like this. In the beginning before signing any papers, find out how much these fees are. Because it is never known what the future will bring.
