Apparently it is not common knowledge in the mortgage community that there are loans available for borrowers with a FICO score under 500, even as low as 350 (the lowest score possible barring 0 credit). Borrowers with plenty of equity in their property can still qualify for a loan although a more expensive loan, often times a cheaper alternative to foreclosure, bankruptcy or massive credit card debt. Hard money loans can also be a cheaper alternative to private equity business financing i.e., using the proceeds for a business purpose.
There are loan programs available for these types of candidates. These loan programs are often labeled hard money loans. Hard money lenders look to the collateral (the value of the property) rather than the credit of the borrower. Hard money lenders will loan typically up to 65% loan to value. In addition, hard money lenders will have more flexible guidelines and offer loan programs that allow for the following typical challenges:
- Stated income or no income verification
- Allow for cross collateral (use more than one property to secure the loan)
- No seasoning
- Unlimited mortgage lates
- Current foreclosure or bankruptcy
- Unlimited cashout
- Non-owner occupied
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