Banks have always been the first stop for every firm when looking for financing options. However, in recent times banks have made it challenging to acquire loans, which is why many firms reach out to private lenders for money.
The private money lending process is different from conventional banking procedures. However, before reaching out to hard money loans from private lenders, you must be aware of its processes.
Continue reading to find out everything about the hard money loan underwriting process.
What Does the Underwriting Process Involve?
Unlike in the banks, the underwriting process in the private money lending industry is straightforward. While banks ask for your business credit scores, firm’s income, and a zillion other things, private lenders only need to check a few financial factors; these include:
- Loan-To-Value Ratio: The LTV ratio is the ratio between the loan amount and the value of the asset. It’s used by lenders to determine the risk in the loan deal. Private lenders prefer the LTV ratio to be between 50-80%.
- FICO Score:The FICO score is a three-digit number that signifies how likely is the borrower of repaying the loan on time. FICO scores are generally known as a summary of your firm’s credit report and can help private lenders make a quick decision. Private hard money lenders usually prefer a FICO score between 650-700, while some lenders have loan programs that do not need a FICO score at all.
- PITI Reserve:The PITI reserve is the amount of cash you need to fulfill the down payment. Private lenders usually require 6–12-month PITI reserve, and if you’ve got excellent collateral, they won’t even require PITI reserve.
How Long Does The Underwriting Process Take?
If you’re searching for quick financing options, you can’t waste your time on time-consuming bank applications. Understandably, you’ll opt for hard money loans from private money lenders to finance your commercial projects.
Reputed private lenders usually take up to 48 hours to pre-approve your loan application and can take a few days to complete the underwriting process.
Get Hard Money Loans In Atlanta Today
Contact us today for more details.