Hard Money Lending for Investments vs. Owner-Occupied Purchases: What You Need to Know
Oftentimes, people looking to purchase residential properties for sale in California look to hard money loans to help them get the financing they need when a traditional loan falls through. While new rules and regulations were originally meant to discourage subprime lending and irresponsible lenders, they can also affect potential borrowers. One of the biggest attractions many borrowers mistakenly believe about hard money lending is that they are not subject to the same regulations as loans from the bank. People believe that they can avoid having to show proof of their income. The truth is, income documentation still needs to be completed, it’s just that what counts as “income” can vary with hard money loans. Understanding Income Documentation on Hard Money Loans Consumer lending on residential property (ranging from 1-4 units), requires income documentation. Your hard money lender needs to be able to document your income and insure that your debt-to-income ratio is in line. I