Avatar's Blog
» Why Tax Returns are Required for a Hard Money Loan
Many people are surprised to learn that Avatar Financial Group wants to see their last 2 years' tax returns and a Credit Report. If hard money is a loan based solely on the value of real estate, why would these items be requested?
The answer has to do with the validation of the borrower. Hard money lenders want to know that the borrowers they are lending money to are living 'on the grid'. To live 'off the grid' means you do not file tax returns. You may have no credit cards, conventional loans or mortgages, and/or you may not have bank accounts. People who live 'off the grid' often have a great deal to hide about their personal and/or business life. Especially in this day when our government needs to track where large sums of money are flowing from and to, it is important to validate the identity of borrowers and business use of private loan funds.
Be prepared to provide two year's taxes (signed) and a credit report. It's OK if you didn't pay a lot of taxes or your credit report is less than stellar. Avatar understands that people seek hard money for such reasons and understands that a wise businessperson will not pay more taxes than necessary. But Avatar does need to verify the identity and validity of our borrowers.
