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

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There is a lot of profit to make from the real estate market. However, sometimes it might be hard to get immediate fresh money to invest in your next property venture with a poor credit score.

Let’s explore how can hard money lenders provide you with a hard money bridge loan regardless of your credit history and snatch your next real estate venture

What Are Hard Money Bridge Loans?

Hard money bridge loans are short-term loans that aid investors in buying a new house during the period when they are waiting for their present property project to sell and pay off existing debt. For that reason, they are also known as gap loans, as they indeed fill the gap where fresh speedy capital is needed to close a property deal before a longer-term loan credit be accessed.

Hard money loans are secured using real estate as collateral. Unlike a conventional loan, you do not need to have good credit to be eligible for a hard money loan. This makes hard money loans an attractive option for investors who may not qualify for a traditional loan.

How to Fix Your Credit Score

Hard money lenders are different from traditional banks because they can give money faster and with less paperwork. Although you need to provide your FICO score, a hard money bridge loan doesn’t require a minimum credit score. Still, if your credit history is poor, you could entice the lenders with the value of the property or your down payment.

Hard money lenders may set aside your bad credit score if there is enough equity in the asset. Usually, investors with over 50% equity in an investment property get easier access to fresh capital that could help pay off debts or improve their credit scores. With time investors can eventually apply for a term loan once their credit score is above 650.

If you don’t have that amount of equity in a property, you could focus on your next asset. Some lenders may look past the bad credit if there is less risk and an attractive appraised value on the property.

Hard money lenders focus on the loan to value (LTV)—the portion of the loan relative to the resell value of the property. The higher your down payment and the appraised property value, the lower the risk for the lender and thus a lower LTV ratio. This ratio can also significantly impact the bridge loan interest rate.

Is a Hard Money Bridge Loan Worth Getting?

Hard money bridge loans can be a great option for real estate investors with low credit scores who need quick access to capital and cannot qualify for traditional bank loans. The guidelines are more relaxed and the focus is on the property’s value, making them easier to get.

Hard money loans offer an opportunity for real estate entrepreneurs to pursue their dreams, and lenders like Hard Money Georgia have broken the status quo of conventional mortgages by providing this loan to lenders in Georgia. Contact us today to work with Atlanta’s best hard money lenders.