3 Things Private Lenders Look for in Applicants
When you apply for anything, whether it’s a loan, a job, or to be a contestant on a hit reality show, you must meet factors and criteria before you’re granted anything. When applying for a loan, your lender will look at multiple deciding factors, including your credit, to determine if they will grant you the loan.
You want to put your best foot forward when applying for a private money loan, but it can be difficult when you don’t know what lenders look for. To shape up your portfolio, pitch deck, or finances, here are three things private lenders look for in applicants.
Your Debt-to-Income Ratio
When applying with a private lender, they may consider your debt-to-income ratio. It looks at your monthly debt obligations as a percentage of your monthly income. Typically, lenders like to see a low debt-to-income ratio—less than 43 percent. If your ratio is higher than that, there’s a chance your lender won’t accept you.
However, a lender might take you if your percentage is higher than 43 percent as long as you have a good credit score. Still, you should work to lower your existing debt before applying again.
The Value of Your Collateral
Collateral is something that you agree to give your lender if you’re not able to keep up with your loan repayment. Loans involving collateral are called secure loans and typically have lower interest rates than unsecured loans.
The value of your collateral will also determine how much you can borrow. This way, you can’t borrow more than the current value of your collateral item.
Your Liquid Assets
Private lenders also look for available liquid assets in applicants. Lenders like to see that applicants have cash in their savings or assets they can easily turn into cash. This reassures them that applicants can still make payments with their liquid assets if they experience a setback.
At Val-Chris, we strive to ensure your loan is in good, understanding hands. We offer private lending services to anyone looking for a creative loan solution for your real estate needs. Contact us today to discuss the application process and how we can help you!
