residential owner occupied loans

Prospective investors often need for substantial loans to finance their projects. However, most of them cannot qualify for bank loans due to poor credit scores. Approximately 33% of Americans have a poor credit score. As such, many investors opt for alternative sources of capital, including the fact that bank loans involve a lengthy process and tedious paperwork.


Today, residential owner occupied loans are gaining favor, and most investors are leaning towards such loans. Hard money loans come from other investors, or individuals and most of them use the property in question as collateral. Hard money allows investors with poor credit scores or those who cannot meet the strict bank requirements to access significant amounts of capital. Here are a few reasons why investors seek private money loans.


Excellent Credits Score Are Not Necessary


One of the significant factors that a bank considers is the borrower’s income as well as credit score. Individuals who have bad credit or lack a good income history cannot qualify for a bank loan. Fortunately, residential owner occupied loans offer an alternative capital source even without a good score or income history.


Hard money lenders evaluate the value and equity of property. The most crucial factor is the value of the property because it serves as the collateral. The equity, in this case, is the down payment for the purchase. Once the lender is satisfied with property valuation and equity, creditworthiness and income of the borrower becomes a non-issue.




Conventional banks are quite strict and rigid because they come up with arbitrary regulations and rules that prevent people from receiving loan approval. Most investors run away from such standardized underwriting processes. Private money lenders evaluate every deal distinctly, so they are flexible.


The criteria a borrower must meet when applying for hard money is considerably less than what is needed for a bank loan. A hard money lender evaluates the situation and comes up with an innovative solution that satisfies both parties. Depending on the borrower’s situation, the repayment schedule may also be flexible.


Fast Approval


The process of applying for a hard money loan is straightforward. Mostly, the borrower will only need to fill out a loan application form. In other cases, the loan can be approved during a five-minute conversation between the borrower and the hard money lender. Most bank loans take up to 45 days without any significant issues on the borrower’s side. Applying for bank loans is tedious because the borrower has to fill out an application form.


Once the entire form is completed and submitted to the bank, the response or approval could take weeks. Such a lengthy process can even lead to the loss of investment. By the time the borrower receives an approval, the property could be long gone.


Hard money loans are approved faster than bank loans, and the money is disbursed within a week or two. Hard money is gaining favor because it helps save investment deals. Usually, such a loan is approved within five days.


Free Advice


Most prospective investors prefer working with hard money lenders because the relationship becomes a partnership. Both the lender and the borrower are concerned about the progress of the project. The last thing a private money lender wants is unprecedented problems with the property, missed payments, or any other potential issue that can ruin the entire project. When the lender is analyzing requests for residential owner occupied loans, they will offer free advice to the borrower.


An experienced and reliable lender gives their honest opinion when evaluating a project and bring up problems that could potentially jeopardize an investment. A hard money lender might spot issues that the borrower was not aware of, which could ruin a great project if left unsolved. Advice from a reputable lender could help budding investors avoid losses.


Final Word


Working with great hard money lenders can be an asset. Residential owner occupied loans offer an excellent alternative source of capital. Today, most investors prefer borrowing hard money than dealing with banks. Contact us today if you need money but don’t qualify for a bank loan.