Can Anyone Qualify for a Hard Money Loan?
You decided you want to flip your first property. That is a great decision, but you might need a way to find money to borrow to make this happen. If this is the case, you can turn to a hard money loan. Hard money loans are ideal for house-flips, but they are not available to everyone. To get one, you must meet the eligibility requirements. Here are some of the things that lenders look for when evaluating loan applications for hard money loans.
1. The Applicant's Credit and Financial State
Most loan types require great credit and stable finances. For hard money loans, this is not necessarily the case. Lenders that issue hard money loans will look at the applicant's credit and finances, but this is not the only factor that matters. It is helpful to know that having great credit and stable finances can increase your chances of getting approved for a hard money loan, but lenders also look at other things. Therefore, you should not assume that you will get approved for a hard money loan just because you have excellent credit.
2. The Person's Experience in This Industry
Next, the lender will look at the person's history and track record with house flips. You would face more challenges getting approved for a hard money loan if you never used one before, or if you never flipped a house before. A person with a lot of experience in the house-flipping industry will have a track record to show the lender. Lenders value history in this industry.
3. The Profitability of the Project
One more feature that the bank looks for when approving hard money loans is the potential profitability in the project. The lender will ask to see your numbers for the project. They will need to know the cost you want to pay for a project and the amount you plan on spending on it. They will also want to see the value of the house after the repairs.
4. The Person's History with the Lender
Finally, a hard money lender will also look at your history of doing business with them. If they issued a loan to you in the past that worked out well for them, they might be more likely to issue you another loan. Working with a hard money lender provides a way for you to build a relationship with them. The result is that you might face fewer challenges in the future with getting approved for hard money loans.
If you'd like to learn more about the process, contact hard money lenders.