Hard Money Lending Criteria

No standard criteria are set for the borrowers as far as hard money lending is considered. In general, assessment of property value is done to find out if the applicants are worth getting the loan. The borrowers should provide the requisite information upfront. The real estate investors must also response to the lenders’ demand for additional information. A general set of criteria for hard money borrowing can be listed as follows:

Location of Property: It is an important factor to determine the property value. The properties, located in the posh areas, are costly and therefore, the owners can expect to get a lumpy sum. Will it be a problem for the lenders to foreclose the properties if the borrowers default on the regular payment? This is an important query of the hard money loan providers.

Current Value of Property: It is the most important criteria for the hard money lenders though some (quasi lenders) are equally interested to verify the borrowers’ credit scores. The value of the property is calculated at the ongoing market rate. Real estate market is a volatile one. So, what was the property value two years or even two months ago is not a fact to heavily rely on. An assessment about future market condition is, however, a factor that must be taken into consideration. Appraisers or real estate brokers are involved in the entire scenario to estimate the current value of the property. While granting money, the hard money lenders also take advice from the industry professionals. All of them do not loan against any sort of property as they have fascination too. In most of the cases, the lenders’ assessment regarding the property value is based on his past experience.