Credit Requirements of Non-Recourse Loans

Non-Recourse Loans are a unique borrowing tool that allows you to take on less risk overall. When you borrow money with a non-recourse loan, the lender will be able to collect only the collateral in the event of foreclosure. If the value of the asset has depreciated, you will not be liable for the difference remaining after they have seized it.

Credit Score

Your credit score says a lot about you and lenders require good credit scores for non-recourse loans. Your credit history needs to be free from any blemishes.

Before you apply for a non-recourse loan, it is a good idea to review your credit report and get your FICO score. This can help you save you time and money because you should know if you have a chance of qualifying.

 Steady Income

The lender will want you to demonstrate that you have a stable history of income. You must have verifiable income. Also, the income must have been relatively stable for the last couple of years. If you have gone from one job to the next, this might not be an option for you. Every lender will have slightly different income requirements and much of the approval process will also very on the amount of loan you need. The more money you plan on borrowing, the more money you need to make on a monthly basis.

Value of the Asset

Besides a good borrower, they want to see a good asset as well. If you default on the loan, this is what they will be stuck with. Therefore, they will want to do their due diligence to make sure that it has good value. The last thing they want is a portfolio of property that no one would buy. If they do get stuck with your property, they want to make sure that they can sell it quickly. Therefore, properties in popular areas are more likely to be approved than some random shack in the woods. Take this into consideration when looking for potential properties.