CREDIT – The Bane of Home Loan Approvals
This aspect of qualifying for a home loan boils down to good credit versus bad credit.
The lenders left in the mortgage market arena, let’s call them institutional lenders, the ones that are offering the 30 year mortgages at historic low rates, require good credit (among other things).
Hard Money lenders allow bad credit. Institutional lenders will make you wait years after you have a bankruptcy, foreclosure or short sale before they will lend to you.
Hard money lenders will loan to you immediately after any of those events and even while you are going through them!
Same with recent credit problems including 30, 60, 90, 120 day lates, judgments and/or collection accounts. Institutional lenders hate these. Private money lenders can do a loan in spite of these.
Hard money lenders generally require just 2 things:
- Equity or a good down payment and
- Ability to repay the loan.
Look at the important role played by Hard Money: Guy has a free and clear property. He fell on some misfortune and his credit was damaged. He makes plenty of money and he has no house payment. He goes to his favorite bank where he’s been for 25 years. Loan denied due to bad credit. He calls a loan officer friend who works for a bigger bank who tells him he’s out of luck due to bad credit and to come see him in a couple of years.
This guy has a free and clear property and none of the institutional lenders will lend to him due to bad credit. A Hard Money broker will do this loan! There is equity and ability to repay.
Let’s say you have a happy couple who make good income and have saved up enough for a decent downn payment to buy a house. They filed bankruptcy a year earlier which included a short sale so no bank will help them out. Yet a Hard Money broker will do this loan as they have decent down payment and ability to repay!
This handles the credit aspect of a loan. Give me a call today and let me help you and your Buyer(s).