Getting a hard money loan approved isn’t nearly as challenging as getting one from traditional money lenders like banks and credit unions. That said, there are still a few things you want to try to ensure you get the loan you need. At AHL Hard Money Network, we believe you can boost your chances of approval by following these simple tips.
Have An Exit Strategy
It may seem strange to start at the end, but having an exit strategy is crucial to getting a hard money loan approved. The way you will repay your loan relies on your exit strategy. You might follow one of two paths:
Consider Your Loan To Value Ratio
The loan to value ratio helps private lenders determine whether a person qualifies for a hard money loan or not. How? Well, most people who take out hard money loans have poor credit or an unstable income, so the risk of getting the money back is greater. Hard money lenders rather focus on the potential worth of the property. You can calculate it by dividing the loan amount by the property value.
Look At Your Ability to Pay It Back
Of course, every lender wants to know that the borrower will pay the money back. With hard money loans, the emphasis on your monthly income isn’t as heavy as with other traditional methods. However, your private lender still wants to understand how you intend to pay the money back. You don’t have to bring your tax returns and other proof of income documents, but you must have a plan.
Collateral is Crucial for Loan Approval
The type of property and potential collateral it will bring is a powerful determinant of whether a loan will get approval or not. Hard money lenders will use that to ensure the investment is worth it. Most people buy a single-family home or apartment building when trying to get approval for a hard money loan. You can also get financing for the following buildings:
Check Your Credit Report
While hard money lenders don’t place as much value on your credit history, you will need to bring a report with you. The LTV score and collateral are the most influential in determining your loan approval, but a poor credit repayment history can negatively impact your chances.
If you’re looking to finance your real estate investment dream, then contact us at the AHL Hard Money Network. We are ready to start your loan process. You can complete this contact form, and one of our trusted lenders will contact you to set up a free consultation! To reach out directly, please give us a call at 813-516-5210.