Borrowers with poor credit scores, and scarce financial resources might find it difficult to even get a credit card, let alone a property loan. However, investing in property is one of the more reliable ways to build wealth, plan for retirement, or improve your credit score. The problem is, with banks shying away from those with poor credit scores, borrowers need to look elsewhere. This is where hard money lenders can help you.
If you have a foreclosure or bankruptcy on your credit record, getting a traditional mortgage can be very difficult. Also, the bankruptcy is likely to remain on your record for a few years. In the meantime, you need to pay daily expenses, create a secure financial future, and try to repair your credit score. You can do this by investing in property. A hard money lender will not put too much focus on your credit score as long as the property is valuable.
While it is true that hard money loans are offered more easily than traditional mortgages, you still need to consider some factors when you approach a hard money lender. A hard money lender will put some weight on your credit score and your experience with property investment. Based on that, you might be expected to repay the loan very early, or pay higher interest rates. These expenses might be worth it, if you are smart about the investment.
This is the single most important factor when a lender is considering your loan application. A hard money lender is an investor, who will be investing their capital into your project. So, they are focused on the returns. If you can assure them good returns, they may give you a loan on easier terms. So, you need to choose a property that will turn in good value, on resale. You would need to buy the property cheap, and then sell it with higher margin. The location of the property and the condition of the property will determine its value. Follow all the guidelines for smart property investments when you are looking for the right investment.
Once a lender is assured of good returns, you will find that the loan is offered within a few days. It is important that you approach only local lenders, since they know the property prices and trends in the area. Also, they will visit the property to decide if they should approve the loan. Approaching local lenders makes the loan approval process faster. If you are looking to invest in a California property, a lender within the state is the best option. Once the loan is approved, you can quickly set down to purchasing a good property, that will turn into valuable asset with the help of the loan.
Other than loan approval time, you will find many other convenient aspects of getting a loan from a hard money lender. In particular, if you wan to repair your credit score, this could be a great option.