How Important is my Fico score to Hard Money Lenders?
Hard money loans 101 are short term loans that require real estate assets as collateral. These financing options are often financed by a pool of private investors. That is unlike the case when you’re dealing with traditional brick-and-stone lenders like credit unions and your local banks. Normally, these loans come with a maturity date of an estimated 12 months.
For ages, hard money or the private money loans, as they’re known by many lenders, have been tainted in suspicion and controversy. The hard money lending niche has been described as a safe haven for shady and hawk-eyed lenders.
True, there exist many awful lenders who are quite notorious for operating with gross impunity by charging sky-high interest rates and deploying all manner of possible methods to recover their dues with would-be defaulters.
But, fortunately there also exists many more genuine hard money lenders in Dallas and elsewhere to serve all your financing needs and wants. This lending industry has yielded to intense pressure to begin enacting regulations to protect the lenders from the at-times predatory lenders.
To help the prospective borrowers in making the right decisions with hard money, here are useful guidelines to ensure they understand hard money and most importantly, they get to know of the best tricks to increase their chances of getting their loans approved by the leading lenders. This article will prove to borrowers, once and for all, how their FICO credit scores aren’t of great importance in determining whether they score these loans or not.
Merits of Hard Money Loans
Take your time to scout for a genuine and trusted Dallas lending company for guaranteed results and outcomes. There are many pros associated with taking out loans from the hard money lenders in Texas.
Often-a-times, when you attempt to approach a conventional lender and get them to give you a loan with friendly rates, you will get turned down. These banks and traditional lenders will most certainly kick you out of the premises under the guise that your credit score is not healthy and, up to their preferred standards.
The default loan limits can, however, be extended to reach somewhere between 2-5 years upon request. Borrowers are expected to repay the funds advanced in monthly payments of just the interest. In the end, the borrowers pay back a lump sum amount and they clear the loan.
The sums you get with the hard loans is dependent on the current valuation of the real estate asset attached as collateral or security if you so prefer. The major difference between hard loans and other conventional loan types is that, with the former financing, your credit score is as good as obsolete when it comes to determining how much cash you qualify for with the reputable hard money lenders. That’s why this loan type has become so popular with consumers, who for one reason or the other, have had their credit scores devastated, but with a property to their name.
Property Types Accepted
By default, hard money lenders don’t discriminate on any type of property. In other words, these lenders will gladly advance you the finance you require provided you have a commercial, industrial, land, single-family residential or even a single-family residential property.
However, it is important to point out that many of these lenders have a specific property niche which they often prefer to work with. For instance, a particular lender may only be well-versed with handling the logistics associated with commercial properties only. It is in your best interests to first ask the lenders to confirm which types of properties they accept to avoid any inconveniences moving forward.
The Dodd-Frank Act, however, makes it a bit hard for these money lenders to dish out the loans to properties where the owner is the tenant occupying the premises. Despite the ton of bureaucracies associated with providing loans to owner-occupied residential properties, some lenders still find ways to overcome these issues and still sort out the prospective property owners.
Using Hard Money Loans
It’s imperative you use the loans wisely to avoid digging yourself in a sure money-pit. Use these loans to finance the following scenarios:-
- Fixing and flipping deals
- Construction loans
- Land loans
- Short Processing Time
Real estate investors are very fond of these loan types for a diverse number of reasons. For starters, the investors only require waiting at most, 5 business days for the loans to get debited in their bank accounts.
Additionally, the lenders don’t obsess much on the credit scores of the borrowers and that means that provided you have a property, then the loan is as good as yours. The quick accesses to the hard loans make them ideal for when the realtor has urgent bids to compete for.
Terms and Conditions
The repayment interest rates and pointed out of the different lenders often vary drastically. The rates changed by lenders in your region may not necessarily match with those charged out of state. Generally speaking, the more competing hard money lenders there are in a particular locale, the friendlier the interest rates and points charged. That’s the main reason you’ll find Californians enjoying superb repayment rates owing to a large number of established lenders operating in that state.
It is essential to point out that the hard money loans come with slightly elevated repayment interest rates. The above normal interest exists for the sake of protecting the lenders from the pronounced risks of defaulting. The average interest rates are placed anywhere from 10-15% depending on the dealer and other underlying factors. Typically, borrowers get points ranging between 2-4% of the principal sums advanced.
Understanding Loan to Value Ratio
The loan you’ll receive from hard money lenders TX is often calculated as a ratio of the total loan divided by the current value of the staked property. This ratio is known as the LTV and its common practice to find most lenders willing to loan you up to 65-75% of the total value of the collateral or property. It’s not also unheard of to find lenders basing their loan calculations on the estimated after repair value of the property in question.
Finding a reputable hard money lender in Dallas or elsewhere isn’t as complicated as many borrowers would like to make it seem. In fact, with the right guidance and a bit of motivation, you’ll only take a couple of minutes at most to score an incredible financing deal against your properties.
Go for trusted hard money lenders
Call or visit the reputed hard money lender, Wildcat lending and get wise counsel as you prepare to take out that all-important loan with your property. Reach out to this trusted financial dealer even with a dilapidated FICO score and you’ll still get help. Wildcat lending has an impeccable track-record for always providing tailor-made and competitively-priced property loans to countless satisfied customers in Dallas, TX.
For more information about the company visit https://wildcatlending.com/.