Avatar's Blog
» What is Lending Criteria?
Lenders, including hard money and non-conforming employ something called lending crtieria to determine who they will lend to and for what rates and terms (more on the rates and terms of private lenders later).
Lending criteria for Avatar Financial Group looks like this:
- Loan Size: $500,000
- Maximum Loan to Value (LTV): 65%
- Property Type: Improved Commercial and Investment Residential Reals Estate
- Proeprty Location: US, including AK, and HI
- Serving: individuals, corporations, foreign nationals
Behind the scenese, additinal criteria that is not so easily put into a single line in a bullet list is employed. For example, Avatar likes to see that the borrower has an income to expense ratio of reasonably more than 1:1. This ration, which is developed from the borrower's P&Ls indicates that the borrower brings in enough money each month to cover expenses, including the Avatar loan, and still have some money to put in their pockets at the end of the day. In other words - the loan makes sense for Avatar and it makes sense for the borrower. That last sentence sums up the entire lending criteria process.
