As mentioned in our last post, hard money loans offer entrepreneurs and businesses options when quick funding is required to finance a special project (usually with a quick closing date) – a project that more rigid, institutional lenders (banks) cannot efficiently and swiftly provide. That all being said, it’s important to be a prepared borrower when applying for any loan type from any institution.
Certain factors definitely influence the ability to secure hard money loan approval.
For example, the type of project matters. Hard money is collateralized with the property in question. Thus, finding prime property (i.e. good location, good type of land, etc.) is of importance to hard money loan lenders. Other factors that may or may not be weighed include cash on hand, a decent credit score, cross collateral, and real estate investment experience. Also, it’s important to be highly communicative on your end. Be on top of things. Return calls promptly. All of this ensures that you get the right funds at the right time.
Beyond this, it’s important to do your research and have a plan of action. Know the area you want to invest in. While hard money loans are primarily secured with the property, it may still be helpful to round up all of your relevant documents because you may be asked about credit, income, and assets. It’s simple: Be prepared. Talking to a contractor is also incredibly helpful to really get a sense for the repairs the property requires.
Lastly, have a solid strategy for either selling or refinancing your property before the term ends. Knowing how you plan to repay the loan is a core factor in a hard money loan lender’s approval decision.
If you cover these bases, you should have a relatively smooth time securing the funding you need to jump on this special project!
Need funding fast? Contact Bankers South! Through our Transitional Lending Program we offer non-conventional, fixed or floating-rate bridge loan types to finance special opportunities quickly.