Top 3 Reasons a Hard Money Lender Will Decline Your Real Estate Loan
Category : Hard Money Loans
- Neighborhood: The property is located in a high crime or extremely distressed area. Sometimes this is where the good rehab properties are found, but if most of the houses in the neighborhood are all boarded up, most hard money lenders will pass on the loan.
- Location: The property is located outside of a major metropolitan area in a rural location where there are no sold comparable within 2 miles of the subject property. Hard money and private money lenders prefer to lend in major metropolitan areas over rural locations. Although a real estate deal in a rural area may look good on paper, if there aren’t sold comps nearby to support value, a hard money lender may turn it down. Also, smaller market, smaller pool of buyers. There are exceptions of course.
- Borrower’s Cash Reserves: Particularly on a rehab loan, a borrower who seems to be grossly undercapitalized is a sure decline. Lenders want to make sure a borrower can afford to carry the loan.