Need cash fast? There are a number of avenues for anyone looking to raise cash in a limited amount of time, whether you need cash to cover a move to another state or you want to close on an investment property ahead of competing buyers. The good thing about hard money lenders is that they can get you the cash you need as long as you meet the criteria. So how do you qualify for a hard money loan?
Qualify for a Hard Money Loan Downpayment
Because of the risk that the lender takes on, hard money lenders require a downpayment or equity as collateral for your loan. In many cases, a real estate property is used to secure the loan. For example, if you need a hard money loan to finance a move while your house is up for sale, you can use the equity on that piece of property as security for your loan.
Ability to Make Payments
Lenders will look at your ability to make the monthly payments and holding costs such as insurance and HOA payments. You are considered a strong borrower if your cash reserves are sufficient enough to cover these costs while your loan is active and it will be easier for you to get a loan from any lender.
Clear Exit Strategy
Your lender wants to make sure that the borrower has a sound exit or investment strategy to ensure that the borrowed funds are applied to a profitable venture or business. If this is your first time borrowing funds to buy a piece of real estate you need to present a strong and sound exit strategy to persuade your lender to give you that loan.
Generally, borrowers with proven track records in the real estate investment game are more likely to get an easier time with the approvals process compared to borrowers who are doing their fix and flip projects for the first time. However, a good exit plan coupled with strong cash reserves can put you on track for a fast approval with any lender.
Hard money loans are useful alternatives for those who need fast cash but can’t get the same support from traditional lenders. Get in touch with DFW Specialty Lending to know more about how you can successfully apply for hard money loans.
DFW Specialty Lending offers various programs to fit virtually any kind of loan, from fix and flip, rental property loans and bridge loans, as well as intermediary services like inspections and documentary support. If you see yourself taking out a hard money loan in the near future, prepare your finances first, ensure that you can meet these qualifications, and have a clear exit plan in place. Doing all these can help increase your chances of getting that application for a hard money loan approved without any hassles.
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