You can find it easy to envision a horse property, but securing proper funding is still the most critical step in preparing to own one. Finding financial assistance can be challenging. Fortunately, you can get an equestrian mortgage loan as long as you have a good reputation, like a good credit score, for example. There is always a way to get financing for properties of these types as long as you do your careful research.
Most financial agencies often leave out horse properties when providing the list of loans they provide. They always look at the income potential of both property and income of the borrower.
Here are a few things you need to know before getting a horse property loan:
Payment history is one of the factors that significantly influence your credit score. Even a single missed payment can negatively affect your credit score. Depending on the finance company, the required credit score for horse properties can be high. The credit score should be at least 680 or even better.
To get the proper funding for your horse property, you must understand the credit score that the agency requires. But, perhaps, your score may be too low. One way to acquire a loan is to fix your credit score. It could take time, but surely you will get your credit score where you want it to be. Couple of things you can do to fix your credit score:
a. Pay your Bills on Time
b. Pay Down Debts
c. Make Outstanding Payments
d. Dispute and problem in your Report
e. Limit any New Credit Requests
While building a better credit score, you can consider opening an account with a credit card company. Use that card for your purchases and pay promptly. You can also build enough relationships to assist with the application process. DO NOT think of rushing, and be sure to avoid missing the correct details.
Most financial institutions do not like to fund horse properties, and even when they do, the interest rates are pretty high.
Depending on the source of your loan, even commercial loans are difficult to get. This is because they want to look at the type of loan you apply for, your aim to acquire the property, and the property’s potential income before agreeing to offer to fund.
The process of getting finance for horse properties can be lengthy. It could take one month or more to be approved and get the loan closed. Therefore, you need to use your time wisely and work with your lender.
Is Hard Money the solution?
With the difficulties of obtaining financial sources from conventional lenders, hard money can almost seem like a viable solution to getting the loan faster. It can even look like a solution in cases of short sales, foreclosure, credit issues, and low-income history. However, even as attractive as hard money looks, it comes with a lot of conditions.
Compared to banks, hard money loans have high-interest rates and can only be used for short times. You also need to have a down payment or equity of at least 35- 40% of the loan. So while hard money could make sense for some other loans, it’s not the best for horse properties.