Posted on: 30 December 2019
Do you want to pursue a less traditional home mortgage method? Hard money lenders provide a valuable service to many borrowers who have unique needs — such as home flippers, jumbo loan borrowers, or those with a lower credit rating. To tap into this valuable tool, though, you need to make yourself as attractive as possible before you start shopping. How can you do so? Here are a few key ways.
1. Be Ready to Go
Hard money lending moves at a lightning pace compared to many traditional lending sources. This means, though, that you need to be ready to act quickly as well. Gather your documentation well in advance. Keep it updated regularly. Learn what lenders are looking for and focus on those aspects. Know what money you need and exactly what you will use it for. And be committed to the purchase.
2. Learn the Ratio
Hard money lending doesn't rely on the same metrics as traditional mortgage lending. But it does have a few common characteristics among its lending community. One of these is the "Loan to Value Ratio" (LTV).
The LTV is the amount of money you want to borrow stated as a percentage of the property's value. Many lenders want to lend no more than about 60% or 70% of the value of the home because they have a higher risk of losing money. To be attractive as a prospect, be sure you stick to homes within this parameter or can adjust your down payment accordingly.
3. Make Your Case
One of the biggest benefits of this type of loan is that you can earn approval based on more than just standard financial metrics. The lenders work within their own comfort zones, so each one has the freedom to pick and choose who they loan to. This is your golden opportunity to make your individual case for a loan.
Determine what makes you less attractive to traditional mortgage lenders and turn these into a positive aspect for the hard money lender instead. Have your pitch written down and treat it like another application document.
If you take the initiative to become a great prospect for a hard money loan, you're sure to find what you want as quickly as possible. By understanding what this unique market is looking for in borrowers and building a solid case for approval, you can take advantage of a little-known but powerful home purchase tool.
For more information, visit a website like ellisequity.com.Share