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How Can Someone With Bad Credit Obtain a Hard Money Bridge Loan?

Updated: Feb 9

You only have the traditional institutions (banks), mortgage companies, and direct private money lenders as possibilities if you're a borrower seeking for finance for your investment property.

However, many of the conventional finance sources would not be good choices if you are a real estate investor with poor credit. The majority of banks and mortgage firms don't have mortgage loan programs for those with bad credit. Fortunately, a Hard Money Bridge Loan is a wonderful choice to get funds and even raise your credit score in the world of private money lenders.

There are so many loans available, and a lot of them substantially factor a person's credit score into whether or not they will grant them a loan. Thankfully, Hard Money Loans are an exception to this rule.

What conditions must be met to qualify for a hard money bridge loan?

The criteria for a hard money loan are your assets, not your FICO score. There is no required minimum FICO score for the borrower, but you must still furnish your credit score. Hard money lenders instead concentrate on the asset's Loan-to-Value (LTV). There is no need to be concerned about bankruptcies, foreclosures, collections, etc. because there isn't any underwriting involved in these loans either. They are typically limited to 75% LTV or below, with rates between 9.00% and 11.99%, and are always bridge loans for 12 to 24 months. True hard money loans never come with terms.

As was already mentioned, the emphasis is on equity and assets rather than credit. If there is enough equity in the property and the applicant can repay the loan, it may be possible to overlook the borrower's terrible credit, prior bankruptcies and foreclosures. The property's value is given additional attention. In comparison to typical loans, the financial checks for these loans are less thorough and take less time. Hard money lenders are exempt from many of the regulations that more conventional bank loan lenders must follow. As a result, a Hard Money Bridge Loan can be authorized considerably more quickly. Stratton Equities, the top Nationwide Direct Hard Money and NON-QM Lender, may fund a Hard Money Loan in as little as two weeks, when a standard bank loan might take 45–90 days.

There is more risk being assumed by the lender because of the short turnaround time and less stringent surface-level financial standards. Therefore, compared to regular loans, the repayment terms are much shorter. A Hard Money Bridge Loan must be repaid in a matter of years, as opposed to a standard loan, which may have a repayment period of around 20 to 30 years. Therefore, if a borrower has poor credit, the lender is taking a bigger risk and needs the money repaid faster.

How Can a Private Lender Improve Your Credit Score?

A real Hard Money Bridge Loan does not have a minimum credit score requirement and can even raise your score, in contrast to a term loan, which calls for a minimum credit score of 650.

If you are a real estate investor and you have a substantial amount of equity in your investment property (more than 50%), you may be able to use a hard money bridge loan to withdraw the funds and use them to settle debts or repair your credit.

Return to the private money lender and submit an application for a term loan after your credit score is more than 650. (ex. no documentation loan).

How can you submit a Bridge Loan application?

Due to predatory lending and expensive rules, hard money bridge loans are only permitted for investment properties. You cannot obtain a Hard Money Bridge Loan if you are shopping for an owner-occupied property.

Due to the substantial risks, some states have non-judicial foreclosure legislation as well. Due to the protection provided by these laws, lenders feel more secure providing these high-risk loans because they are not traded on the secondary market and the lender keeps the note. Additionally, rural communities are not eligible for these loans if they have poor FICO ratings.

If you have poor credit, get in touch with Stratton Equities to find out your available loan alternatives and which one will suit you the most.

Our goal at Stratton Equities is to make private mortgage lending simple, effective, and stress-free. With a straightforward three-step process that includes pre-approval, processing & underwriting, and funding, we assist other seasoned investors, borrowers, and experts in the mortgage and real estate industries in succeeding.

To find out if you qualify for loan pre-qualification, call us at 800-962-6613, send us an email at info@strattonequities.com, or submit an application right away by clicking here!


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