COMMON REASONS YOUR PRIVATE MONEY INVESTORS WILL DENY YOUR LOAN: 3CALoan
Many people opt for private money home loans for investing in real estate instead of traditional lenders like banks and other institution. The important factor for choosing private money home loans is credit rating and with this, there is one more factor that these loans can be much more expeditious than borrowing home loans from banks. Because the loan lender in private money home loans is more interested in collateral rather than credit score. And they also expect some plan for seeing the return on investment from the projects you are choosing. Projects like rental properties, house flipping, or other commercial interests. The process of private money loans is very different from banks because the funding comes from an individual or a group of private money investors.
You should be aware of the criteria of private money investors, otherwise, there is no surety that you will get the approval of the loan when you will apply for private money loans. In this article, we will discuss some reasons why private money loans are commonly denied.
INSUFFICIENT CAPITAL OR COLLATERAL
In private money home loans, the private money investors don’t only check credit scores or your history like normally traditional lenders do. But they also require you to put something on the table like you can put any capital or collateral. If you don’t have anything with you to put on the table for your real estate project. That means you not taking any risk for the project and why would the lender take all the risk for your profit?
So, you must come prepared with some capital and/or collateral that will help you better. In this way, the private money investors will feel less risk and will also happily help you. They are often willing to overlook credit score and past credit issues if you will arrange some suitable amount of collateral for the project.
LACK OF ONGOING INCOME
In addition, to put a down payment and some collateral, you will also require giving some surety to the private money investors that you will be able to make monthly payments on your home loan. This will require a fixed and balanced income. According to your ability to make monthly payments, the amount of your home loan will be set.
POOR PLANNING
When you want to purchase a property as an investment, you should have some plan to pay off the loan and also have some profit. Always prefer to pay off the home loan sooner rather than later. Private money home loans are the short-term loans. Usually, you will have to pay off the home loan within 1-3 years.
For this reason, some aspects of your plan can create a problem for you while obtaining a home loan approval. Property in an unsuitable location. Mostly areas with higher turnover and values but low crime rates tend to be the best bet. You should have a plan with exit strategies that will ensure the private money investors about the return. Basically, private money investors want assurances that they will get the money back which they invest with interest.
FINAL THOUGHTS
While doing an investment choosing hard money loans for real estate is a great option. You should have the full information about hard money loan terms. Don’t rush during the process and avoid the common mistakes with loans. We know that sometimes people have a harder time for getting a loan. That’s why we offer multiple different alternative financing options. Our competitive rates, efficient services, and talented team can help ease the process of the home loan. We help our customers every step of the way. We prioritize informing and educating our clients about the home buying process. Our client’s happiness and confidence upon closing a deal reflect our excellent quality services.
3CALoan local mortgage broker provides no tax return home loan which is also called no tax return, without tax return, without tax return, Private money loans for real estate, private hard money loans, bank statement home loan, bank statement loan, equity loan and many more. If you still have any doubt, you can contact us at (818) 322-5626 or (818) 3CA-Loan today! Our specialists will be in touch promptly to answer your questions. We will run you through the details of home loans and hold your hand throughout the process. We only have one aim of helping people first.
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