When a borrower is looking to obtain a loan to make a large purchase and they’re turned down by their bank, they often turn to hard money lenders. In case you’re not familiar with hard money and what it is, it’s a type of loan that comes from an individual or a private company. These individuals and private companies will give loans to individuals who can’t get a loan from their bank, either because their credit score isn’t high enough or they don’t have enough cash on hand for the bank to make the loan. The problem with borrowing money from banks is that they have a lot of regulations and internal rules that they have to follow. These regulations and rules got even stricter after the economic recession of nearly a decade ago, so banks are even less likely to give out loans than they once were. Thus, if a borrower approaches a bank for a loan and they have something in their history that’s a red flag for the bank, the bank won’t go through with the loan.
In many of these instances, the borrower can still qualify for a hard money loan from a private lender. That’s because most hard money lenders are less concerned with the borrower’s credit and are much more concerned with the value of their assets. If the borrower is able to show that they’re going to be buying a house with the loan or that they already own a house that’s worth as much or more than the loan they’re taking out, then the hard money lender is going to be likely to lend to them. They just want to make sure that the loan can be covered if something goes wrong. They don’t really care about the credit score of their borrower; they just want to make sure that the borrower has enough asset valuations to cover the cost of the loan.
Hard money lenders also tend to want to know that the borrower has some skin in the game. They’re giving the borrower a loan, but they want to know that the borrower stands to lose something if they don’t pay back the loan on time. These lenders believe that if the borrower has something to lose if they don’t pay back the loan that they’re then going to do everything in their power to make sure that they pay the loan back on time. By only lending to borrowers who have some skin in the game, they’re ensuring that their borrowers are going to do everything in their bower to pay their loan back as quickly as possible.
If you’re in need of a hard money loan but you don’t want to just borrow from anyone, make sure you pick a quality and well-respected hard money lender like Montegra Capital Resources. They’ve proven over the years that they’ll only lend to borrowers who they feel are truly going to be able to pay their loan back in full and on time.