There are many reasons that a potential home buyer does not have great credit. It could be the result of poor financial choices in the past, the loss of an income or even just a younger person who has not established his or her credit sufficiently. But the result is always going to be the same rejection from banks and traditional lenders. Which is why many people are turning to Hard money loans in Colorado when they are unable to borrow from traditional lenders.
Traditional mortgages normally require a credit score of 620 or better and a score on the lower end is not going to be garnering a very competitive interest rate. In addition, late payments and bankruptcies are likely to eliminate your chance for a loan. But Hard money loans in Colorado are much easier to qualify for because they are asset-based loans. This means that you can have a lower credit score and even have a less than traditional income stream such as self-employed or a freelancer. What the lender is going to carefully consider is the value of the property, or asset, that you are going to use as collateral on the loan. Not only will the collateral need to be easy to liquidate, such as a property to sell, but it must also be more valuable than the amount of the loan that you are requesting.
In asset-based lending, the lender has the right to take the collateral and sell it to recover his or her investment if you default on the loan. The term default can mean missing a single payment or falling a few payments behind. That definition is up to the discretion of the lender and is something that you should be sure to clarify before signing the loan documents.
To be certain that the collateral is always worth more than the loan balance, Hard money loans in Colorado are only offered for a percentage of the value of the property being purchased. This means that in addition to securing the loan, you will need to have cash on hand for the down payment. This provides some security for the lender and is also good for you as you have instant equity in your new home.
Because hard money is offered by private lenders, the terms of the loan are very flexible. This can be great if you are requesting terms that are helpful to your ability to make payments, such as no payment for 90 days. But it can also create complications if you do not read the entire loan document and understand exactly what is expected of you as the borrower. In most cases, loan documents are very complex and it is in your best interest to have the loan paperwork reviewed by a legal professional to be certain that you are not getting yourself into a loan that has unreasonable terms. Understanding the terms of your loan and your responsibilities is critical to making a wise financial choice.
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.