Whether you have no credit or bad credit, finding someone to lend you monies you may desperately need to make home repairs or other necessities can be quite an ordeal. In today’s society with the economy the way it is, it is hard to find someone who doesn’t have at least one little mark on their credit score against them. This doesn’t necessarily mean that they didn’t want to pay off their debt, but that circumstances prevented them from making good on their debts and financial responsibilities.
How to Find Private Money Lenders with Bad Credit
Hard Money verses Soft Money Loans
- There are differences between hard and soft money loans that you should be aware of if you are considering a loan.
- Soft money loans are usually provided by banks and other institutions. These loans usually require at least a thirty day waiting period and credit checks. Interest rates may be higher or lower depending upon your financial credibility.
- Hard money loans are provided by individuals, like you and me, using their own cash availability. Hard money loans are meant for people who cannot get credit because they don’t have any credit built up, or because they have bad credit and have troubles getting loans and credit anywhere else.
Understanding Hard Money Loans
- Consider where the loan financing comes from in hard money or private money loans. The financing comes from an individual person who is putting up their own cash stores to loan to you.
- Hard money loans, because of where they come from, are usually more restrictive. This doesn’t mean that it’s not possible or too difficult to get a hard money loan, just that there are a lot of restrictions on them. A hard money lender will probably scrutinize your assets and financial credibility a little closer than a soft money lender. However, unlike soft money lenders, hard money lenders have the ability to decide based solely on their feelings about you as a person. A soft money lender may like and even believe you well enough, but will still be required to turn down your loan if it doesn’t meet the bank’s or other institution’s loan requirements.
- The consumer laws have changed so that consumers are more protected than they used to be. In earlier times, hard money lenders could lend money knowing that if you didn’t pay they could easily take your home and other assets. With protective consumer laws in place now, this process is not nearly as easy as it was, therefore hard money lenders must be somewhat careful to whom they lend money to.
- Typically, hard money lenders will loan up to seventy percent of what your home is valued at when it is in complete repair. In other words, if you are renovating your home, the lender will look at what the home will be worth when in complete repair and may loan you up to seventy percent of that value.