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» How Do Lenders Decide When They Will Fund a Hard M

Posted on 4/9/2005

Hard money lenders, Avatar Financial Group included, make their lending decisions based on three critical factors:

  • How will the borrower meet the monthly payments?
    • how that your income generated from the property or business in question can generate enough monthly income to meet all expenses, including the Avatar loan. Hard money lenders like to say a 1.2:1 ration of income to expenses.
  • What is the exit strategy for the loan?
    • Show that you have a workable plan to refinance or repay the loan within three years.
  • What can the property be sold for on a quick-sale basis?
    • Distinctly different from an appraisal (although appraisals are also valuable information), the quick-sale value of a property is what lenders need to use when valuing your property. In the event the loan cannot be paid back, the lender must sell the property quickly to recoup the funds loaned.
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