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Saturday, June 2, 2018

The Benefits of Hard Money Loans Arizona

Hard money loans are not as intimidating as many borrowers have come to believe. Understanding the benefits of hard money loans Arizona will clarify why they are a very useful financial tool.

Many borrowers view hard money loans Arizona as some type of shady deal that operates on the fringe of the legitimate lending world. But nothing could be further from the truth. Hard money loans are a completely legitimate and legal way to seek funding when a traditional lender or bank is not able to meet your needs. In addition, there are a number of benefits that are specific to a hard money loan.

Time can be an investor’s greatest enemy when a deal needs to move quickly to avoid a lost opportunity. Completing a tradition loan application can take days and then there can be weeks or even months of waiting to receive a final decision. All of this time is an open door for another investor or buyer to swoop in and steal a deal. But the process of applying for hard money loans Arizona is much faster. This is because the lender is really only interested in the current market value of the collateral being used for the loan. The lender is not going to do a deep dive into the borrowers business or personal finances to determine creditworthiness and debt load. So a simple property appraisal and evaluation can be completed very quickly in comparison.

In addition to the fast turnaround for funding, the other terms of hard money loans Arizona are also more favorable to many borrowers. Unlike the long terms of a traditional loan, hard money loans can offer terms as short as three months or as long as two to five years. This flexibility is perfect for the investor or flipper who is going to purchase, renovate and resell quickly. Builders are also fond of these terms as it allow time to build on a piece of property and then sell within the year and move on to the next project.

Credit is Not an Issue

The final benefit is to those borrowers who have no credit or less than perfect credit. Having no credit is almost as bad as having bad credit. But in the case of a hard money lender, neither of these issues is a deal breaker. The lender is only going to look at the value of the collateral to determine if he or she is willing to fund the loan. Credit is not going to be an issue, so hard money loans offer an opportunity to many borrowers who just don’t meet the high standards of the traditional lenders.

A Financial Tool

There is no one all-purpose tool for everything and finance is the same concept. Not everyone can meet the criteria for a traditional loan nor can they wait for a bank to approve the long form application. In some cases, a hard money loan is just simply a better option than a traditional loan.

Monday, May 28, 2018

What Hard Money Lenders Arizona Are Looking For

Understanding what hard money lenders Arizona require to fund a loan will make your application process fast and easy so you can move forward with your real estate investment deal.

Most people feel a great deal of apprehension when they are requesting a loan. There are mountains of paperwork as well as many lofty qualifications that must be met. And even after attempting to meet all of the criteria, many potential borrowers are turned down. But knowing what hard money lenders Arizona require to fund a loan request can turn a difficult situation into a very successful investment deal.

Unlike traditional loans which are based on your creditworthiness and ability to repay the loan, hard money loans are based on the value of the real estate being used to secure the loan. This collateral is really the deciding factor on loan approval and the amount of the loan. So credit issues or no credit will not eliminate your chances of securing a hard money loan.

You also need to understand that hard money lenders Arizona are in business to make money. So even though they are not imposing the credit qualifications that a traditional lender would use, the hard money lender Arizona is going to protect his or her investment. This is done by only funding a loan that is between 65% and 75% of the value of the collateral property. This ensures that if the borrower defaults on the loan, the lender is still able to sell the collateral property to recover the full balance on the loan.

Hard Money Down Payments

Because hard money lenders offer less than the full purchase price of a property, buyers need to furnish the remaining funds in the form of a rather substantial down payment. This actually is a second form of security for the lender as buyers have their own funds tied up in the deal and will work even more diligently to make the deal a success and repay their hard money loan. Lenders look at the borrower having “skin in the game” as a great source of motivation.

A Good Option When Used Correctly

Hard money loans are a good option for many borrowers as long as they understand the process of the loan and how to use the money correctly. Paying a higher interest rate on a short term hard money loan can often be the difference between closing a deal and losing out to someone else who is already funded. Then circling back to a traditional lender to refinance at a lower rate and a longer term is the smart move. But this entire process hinges on borrowers knowing how a hard money loan works and being prepared to work within the terms of this type of loan.

Being prepared to provide the large down payment and being willing to use the full value of the property as collateral on the hard money loan are two steps that each borrower much take to benefit from a hard money loan.

Wednesday, May 23, 2018

What Are Hard Money Loans Arizona?

Understanding hard money loans Arizona will provide investors with an additional lending resource when they are interested in investing in real estate. It will also greatly reduce the time involved in securing funding.

Hard money loans Arizona are just loans that is secured by real estate. In addition, these loans are funded by private investors or lenders instead of the traditional banks or loan companies. In most cases, the loan is short term such as a 12 month time frame or even as short as three or six months. But the term can be extended to as long as two to five years. Another term used for this type of loan is asset based lending.

The terms of hard money loans Arizona are flexible because the lender is not obligated to follow the same rules and restrictions that traditional lending institutions must follow. The private lender is able to work more closely with the borrower to create terms that are mutually beneficial to both parties. For this reason, many borrowers prefer hard money loans Arizona over traditional loans.

In addition to being flexible with the repayment terms of hard money loans, borrowers also like the fact that it is much easier to qualify for a hard money loan than a traditional loan. Instead of the lender reviewing the borrowers credit, income and current debt load, the lender is really only interested in the current value of the property that is going to be used as collateral for the loan. This allows borrowers with no credit or poor credit to still be able to qualify for the hard money loan.

Deals the Could Require Hard Money Loans

Hard money loans are not the perfect solution for any type of deal. They are financed at a higher rate than a traditional loan and also can have additional loan fees which are charged to the borrower. In most cases, if a borrower can get a traditional loan, then that is the best solution. But when banks are not willing to fund a loan request then hard money is a viable option. Deals such as a short term fix and flip, land loans, construction loans and deals that have a very short time frame for funding are all prime examples of the perfect reason to select a hard money loan.

Properties to Secure a Hard Money Loan

A borrower can use just about any type of property to secure a hard money loan. The only qualification for a property is that the lender be willing to accept that type of property as collateral. Often times a lender would prefer a single family home as collateral because it has a more stable market value and is easier to liquidate if the borrower defaults. But multi-family residential, commercial, industrial and even unimproved land can all be used to secure a hard money loan.

Understanding how a hard money loan works and when it is beneficial, offers borrowers a legitimate option for funding when a traditional lender has declines a loan application.

Wednesday, May 9, 2018

If You Find Experienced Hard Money Lenders, You’ll Have an Easier Time Getting Your Loan Approved

When you are looking to get your loan application approved, working with professional and experienced hard money lenders will ensure a smooth process. Level 4 Funding offers the following tips to find the right lender.

In the world of loans, finding someone that has a reputable name and that you can trust can mean the difference between a smooth application and approval process and a… not so smooth one. When you are putting the fate of your potential new business or property in the hands of a lender, trust is never more important.

Do your due diligence before you sign on any dotted lines. Look for lenders that have experience in your specific niche, and that have testimonials or references they are willing to share with you. Look online or with the Better Business Bureau to see if you can find out anything about the hard money lenders that is not on their website. You want to make sure that the company has the professional experience to do what it takes to get you the best loan for your needs. This will ensure a smooth and easy transaction.

Give credit to the lender that thinks outside the box.

A fresh or different perspective on the way the loan should be done is always worth considering. If your hard money lenders are willing to get creative to get you the best loan, take that into consideration!

It’s not just about getting the best loan rates.

While rates and your repayment schedule are obviously very important, there are other things that are important too. Sometimes it’s true that you get what you pay for, and you want to make sure you feel good about the advice that your lender providing you with. Look for a local company that is available to speak with you and answer any questions until you feel comfortable with all aspects of the loan contract. Ultimately, it will come down to trust and your gut instinct. Oftentimes, just having a “good feeling” about someone is enough to make your decision about the right lender to get your loan with. The process should be a win-win situation for both the borrower and the lender and if you are both open and honest with one another, that is a great way to ensure the agreement is ideal for all parties involved. So depending on your needs, it’s not always experience, or a local company or fresh creative thinking that wins the day — it’s more about trust and who you really feel can get you the best loan for your needs. Level 4 Funding is a reputable and trustworthy company that would love to be your reliable hard money lenders. Level 4 agents are available for online live chats or give them a call to see how they can be of help to you as you navigate the sometimes unchartered waters of trying to obtain a loan.

Saturday, March 31, 2018

How to Evaluate Hard Money Lenders

Selecting hard money lenders is very much like finding any other service provider to work with. The success of your loan and business relationship relies on your due diligence.

It can be very easy to get nervous when you are looking for a lender of any type. After all, you are going to ask this person or institution for money and that just makes most people uncomfortable and nervous. But the key to a successful search for conventional lenders or hard money lenders is remembering that you are their customer and that they are in business to offer you a service. Even if you are seeking a private lender because you have been rejected by a traditional bank, do not rush to accept the first loan offer that you get.

Start your search in the same manner that most of the world uses to find anything, the Internet. Does the lender have a legitimate website? Some websites are simply portals which are gathering information and then sending it off to potential lenders. This is not what you are looking for. A legitimate private lender will have a professional site which will provide you with contact information, general information about the lender, information about the type and size of the loans that they offer and their criteria for lending.

Once you have compiled a list of hard money lenders that you would like to speak to, take an additional step and check them out further. Search to see if they have any litigation pending against them or if there are issues pending with any investors which they might have. In some cases you can also learn what other borrowers have said by doing a google search of each lender. There are numerous sites where consumers report poor service or poor business practices by just about any service provider that you can think of.

As long as you have not uncovered any red flags, then contact each lender to set up an appointment to speak in person or a call if they are not local. At this time it is a good idea to have prepared a list of questions to ask each lender. These answers will allow you to compare each lender on the same criteria. You might ask what type of loans they most often fund or what dollar amount is their average loan. You will also want to inquire about their time frame for funding the request and their criteria for approval of the loan request.

Once you have gathered all of your information, you will want to calculate the total cost of each loan offer. Be sure to consider loan origination or processing fees and any other fees such as an early repayment penalty. This total cost should be your main criteria for selecting any hard money lenders. If you have two lenders who’s offers are the same then you can use more personal characteristics in your decision making process such as who you think will be the easiest to work with or who is located closer for more easy access. But be mindful of cost and the fact that you are going to be the customer.

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Friday, March 30, 2018

Why Understanding the Basics Helps to Avoid Red Flags on Commercial Loans

Applying for commercial loans is normally a long process. It is important to avoid raising red flags to keep the process as stream lined as possible.

Understanding the basics of commercial loans is critical to completing a loan application correctly and not raising unnecessary red flags which will slow down or stop the application evaluation process. Most commercial loans are offered for between 5 and 10 years but the amortization period is up to 25 years. Requesting a loan for a longer period of time is not normally an option but can indicate to lenders that you might be concerned about your ability to pay the loan in full in the allotted time frame. A standard down payment of 20% to 25% is expected on commercial loans. Again, this is a fairly non-negotiable fact as is a loan to value ratio of 80% or less.

One of the first red flags that a borrower can trigger is by demanding an unreasonably fast loan approval process. Some loans and lenders require 90 days or more to process and fund a loan. In a best case, it will require at least 6 weeks to process a loan application even if you have previously worked with the lender and been successfully awarded funds. An experienced and confident borrower knows the timeframe involved and has planned accordingly. Trying to rush the process indicates either inexperience which could jeopardize your approval or that your financial situation is about to change and you want to get approved before your creditworthiness drops.

Another red flag jumps out if you appear to be withholding information or are intentionally providing vague answers. A lag in response time might not be because you are trying to hide information but even if it is because you are not well prepared or are disorganized, the result is still a negative mark against you. Requiring continued requests for the same information is not going to make the lender bored and cause them to stop asking. It is going to make them worried or more curious and they are going to dig even deeper to find the reason for your secrecy.

Be Realistic

Finally, requesting a loan which is in excess of the 80% loan to value standard is going to create unneeded issues. The first thought is that you have not completed you due diligence and you are unaware of the actual property value. This makes you look ill prepared and unprofessional. The other thought is that you are simply disregarding the standards set by the industry. This makes you appear to be unrealistic and also self-absorbed as if the rules do not apply to you. Neither of these will create a positive image for you with the lender.

Avoid Any Unnecessary Issues

Most commercial lenders adhere fairly closely to the industry standards for loan terms. Understanding these terms and being realistic with your request will keep the process moving at or ahead of the average pace. But trying to rush or refusing to honestly answer legitimate questions posed by the lender will only cause unnecessary questioning of your business and financial stability which could eliminate your chance of securing a loan.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Sunday, March 25, 2018

Reasons to use a hard money loan for your next fix and flip project

A hard money loan (or an asset-based loan) offers you the benefits of flexible terms and quick approval. Learn why you should consider this type of loan for your next fix and flip project.

Fixing and flipping single-family homes is the subject of many popular television programs and no doubt most readers will be familiar with the process. An investor purchases a single family home, upgrades and repairs it and then sells it for a profit. Every fix and flip project has the same goals, to maximize market value, minimize the cost of renovations and to sell the property in the shortest time possible. But starting any fix and flip project also comes with the added cost of the financing.

Consider using a "hard" money loan to finance your fix and flip project. The value of the investment property secures this type of loan. This type of lender is likely to consider the potential value you can achieve with your project, instead of your credit score. Hard money loans can clear within a matter of days, which makes them ideal when you need to act quickly on a great investment opportunity.

A hard money loan can be the ideal financing solution for your house flipping project

A traditional mortgage will be hard to secure if your investment property is particularly distressed.The majority of regular banks fund their loans by selling them to Fannie Mae or Freddie Mac.More than likely your property will fall short of FHA guidelines, making the sale of the mortgage to Fannie or Freddie impossible.

Traditional lenders are also wary about the potential for default should your project not go according to plan. Generally it is not worth the effort for a regular lender to underwrite your loan or to thoughtfully consider your proposals.

Most asset-based lenders consider the potential of your project rather than your credit score or your properties current condition. If you are a seasoned house flipper, or you can talk up your specific plans, more than likely you can qualify for a asset based loan. Asset-based loans can also close quickly which allows you to take advantage of immediate investment opportunities.

If you intend to flip a home in Arizona consider using Level Four Funding as your hard money lender

Level 4 Funding offers short-term financing which is ideal for house flipping projects. Levels 4 offers interest-only loans which gives you the benefit of lower monthly payments. Level 4 Funding can also finance to 85 percent of your next house flipping project, whereas most other asset-based lenders usually only offer up to 75 percent. With Level 4 Funding you'll need to spend less of your own money up front to get your project started. Level 4 Funding offers flexible loan terms, with a minimum term of less than a month allowing you to pay off the loan at your convenience.Level 4 Funding can also close loans within a matter of days, which will help you get your project started quickly.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Saturday, March 24, 2018

How to Think Like Hard Money Lenders

When you are seeking a private loan, it can be helpful to learn to think like hard money lenders do. This will help you to prepare for the process and to know which information will be critical to the decision to fund or reject your request.

When you are making your first request for hard money, it can appear to be a very odd change from completing the myriad of paperwork required by a traditional lender. It might even feel as though you are ill prepared for the meeting because you are not carting in piles of bank statements, credit reports and income statements. And if you are, then you are going to be surprised and embarrassed when your lender is less than impressed and wants nothing to do with all of your paperwork. Hard money lenders are a different breed and they are looking for completely different information to evaluate your request and determine if they will approved your loan.

The key to securing hard money is nailing the loan to value ratio. This is the ratio between the amount you are requesting and the current value of the property. Most hard money lenders are looking for an LTV of 65-75%. There are some lenders who will also consider the property’s after repair value as well but that is not a standard practice. With that in mind, those lenders will also want to see your business plan to renovate the property and your budget to make sure that the numbers are in line with their estimate for the renovated value of the property.

Know the Critical Term

Knowing that the loan to value ratio of the property is the key to getting a loan, you need to be certain that you have enough of a down payment to make the loan request fall into the desirable range for the lenders. Understand that the lender is protecting his or her investment by only lending up to 75% of the value of the property. In the event that you are unable to make your loan payments, the lender will need to take possession of the property and sell it to get their investment back. And the only way to be sure that they get their full investment back is to know that the property will always be worth more than the balance of the loan. Hard money lenders are not being unfair or trying to take advantage of borrowers, they are simply practicing good business and protecting their investment.

Think like a Lender

Understanding the lenders point of view will only help you to better prepare yourself for requesting a loan. Knowing that the most important factor is the LTV and not your credit score or credit history will save you a lot of time and paperwork. You can then invest that time into researching the current value of the property and procuring funding to make the down payment you will need to meet the LTV ratio. In addition, you can invest your time in creating your renovation schedule and budget to demonstrate that you will be quickly and efficiently adding value to the property as soon as you take possession of it. All of this information will help to ensure that your hard money request gets funded.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Friday, March 23, 2018

What it takes to get a Commercial Real Estate Lenders Approval

Knowing what commercial real estate lenders are looking for on an application will be very helpful when you are ready to seek a loan. Some of the information could surprise you.

Getting your loan application approved by commercial real estate lenders requires more information and effort than most first time buyers expect. But the key to understanding this request and the amount of information which is requested comes from taking a look at the loan from a lenders perspective. Commercial real estate loans are often quite large and hold some inherent risk. The lender is simply trying to eliminate as much risk as possible by being restrictive and stringent about their lending policy. This allows them to make their money and well qualified businesses to make their real estate purchases. They use a system which is sometimes called the three C’s to evaluate loan applications.

Collateral is a big factor in commercial lending. All loans are secured by a lien on the commercial property being purchased. This allows the lender the right to take the property and sell it to pay off a loan in the event that the borrowers default on the loan. If you are requesting a loan which exceeds 80% of the value of the property being purchased, the lender might also request that you offer other property or items as additional collateral for the loan. In most cases the lender would like the loan to only be 80% or less of the property value but in some cases they will accept cross-collateralization.

Cash flow is also an important factor to commercial real estate lenders. They need to see that either the property itself generates enough income to cover the cost of the loan payments or they need to see that the business purchasing the property has sufficient cash flow to pay the loan. In addition, commercial real estate lenders like to know that there are cash reserves or other assets which can be easily liquidated should the economy change and cause a decrease in the cash flow needed to make the loan payments.

Your Personal Promise

There are some occasions when the business does not have enough credit to merit a commercial loan or it has questionable credit. In this case, a commercial real estate lender will require the borrower to personally guarantee the loan. To qualify for this you must have a 660 personal credit score or better, no bankruptcy in the last 7 years, no foreclosures or short sales in the past 3 year and no open tax liens or judgements. If you meet these criteria then your credit history and creditworthiness will be considered during the loan application.

Know What Lenders are Looking For

Commercial lenders are looking for a business which is in stable financial condition and has been for at least three years. The lender is also looking for the ability to repay the loan and to have a cash reserve in place if needed. Before you begin a loan application, you should carefully consider how well your business will fare when they are judged on the three C system.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Wednesday, March 21, 2018

The Requirements for Securing Commercial Real Estate Loans

Due to the dollar amount of most commercial real estate loans, the criteria to qualify is more stringent. It’s important to understand these requirements before you apply for a loan.

Not only are commercial real estate loans substantially larger than most other loans, they are also inherently more risky. This increased risk is due to the fact that most businesses financial health is very closely tied to the overall economy unlike the financial health of a consumer which is more insulated. To offset this risk as much as possible, lenders are much stricter about the qualifications for commercial real estate loans.

The first step in securing a commercial mortgage is to have the property appraised. Legally, the lender will need to have this process completed but it is not a bad idea for the borrower to also have an appraisal completed. It is critical that the property value be equal to or exceed the amount of the loan being requested. This is simply because the property will be the collateral for the loan. Most lenders want to see the property value at least 20% greater than the loan amount to ensure that the collateral is always greater than the outstanding balance of the loan.

When a business entity is making the purchase, the lender is going to want to verify that the business is financially stable and has the ability to make the loan payments. The lender will request documentation to verify the cash flow of the business as well as the debt that the business is carrying. Lenders prefer to see a steady net income 20% greater than the debt. It is also important that the business have some type of savings or other assets which are very liquid in the event that the business slows and cannot make the loan payments from the months’ income.

If the business entity does not have a strong credit history or is relatively new, the lender will require the owner of the business or owners to become personal guarantors. This basically means that the business credit history does not merit the loan and the owners are willing to use their personal credit history and scores to obtain the loan. This also means that the owners are willing to use their own personal funds and property as collateral for the loan.

Understand What Lenders are requiring

In many cases there are nonrefundable fees which must be paid to apply for commercial real estate loans. Knowing that your business or your personal credit is strong enough to secure a loan is very important before you begin the long process of a loan application and pay the fees to have the application processed. If you have any questions about the qualifications, you should invest your time in more research.

Due Diligence

There is a lot to understand when seeking a commercial loan and researching the process, the potential lenders and the criteria for securing a loan is a very smart choice. Speaking to a local bank or a mortgage lender is a good way to gather information and learn about the process to help you avoid wasting both time and money if you are not prepared to meet the loan application qualifications.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Tips for Landing Commercial Loans

Commercial loans are all about risk. Lenders are looking for some very specific criteria before they are willing to approve a loan application.

Commercial loans are more difficult to get than consumer loans because they are often for a much larger dollar amount. Lenders are in business to make money and that means that they must be very selective when lending a large sum of money. Understanding the criteria that lenders use to evaluate applicants and why they have these standards will help you to tailor your documentation to these criteria and show lenders all of the right information about your business.

Lenders are first and foremost concerned with your ability to repay the loan that you are requesting. They want to see long term documentation in the form of profit and loss statements, bank statements and tax returns to demonstrate that your business is financially stable. The might also want to see documentation about other credit which has been extended to your business. This could be in equipment rental, from a supplier of materials, from a property that has been leased or from a vendor. Lenders also favor a borrower who has some cash in savings to cover expenses in the event of a slowdown in business and revenue.

The next big interest for a lender is that the commercial property that you are purchasing has a value greater than the loan which you are requesting. This is because the property will serve as collateral for the loan. In the event that you default on the loan, the lender will take possession of the property and sell it to cover the outstanding balance of your loan. In most cases the loan will only be approved for about 80% of the property’s current value. This is due to the volatility of commercial property values. Having that instant equity in the property assures the lender that even if the property value drops, the loan will still be adequately secured.

Becoming a Personal Guarantor

In some cases a business entity does not have sufficient credit history to demonstrate financial stability. When that is the case commercial loans are secured by a personal guarantor which is normally the owner of the business. The owner needs to be able to demonstrate to the lender that their personal assets and money can be used to cover the loan payments. Again, the lender will need to see documents including bank statements, tax returns and personal net worth statements to verify the guarantor’s finances.

Understand the Lenders Goal

In almost every case, a lender is simply looking at numbers to determine if a loan applicant is a good risk. Knowing this information, it is critical that you show repeatedly that the business is financially stable, has a strong and steady stream of revenue and that you are also financially stable. In addition showing that the business has sufficient cash reserves to bridge a short term cash flow issue will give the lender added confidence in your ability to repay the loan that you are requesting. Approval for commercial loans is based on ability to repay the loan and the financial stability of the business in almost all cases.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Tuesday, March 20, 2018

Key Differences between Commercial Loans and Residential Loans

Knowing the differences between commercial loans and residential loans will help you to understand the lengthy process when applying for a commercial loan.

Most consumers think that the process to apply for a residential loan is fairly in-depth and thorough. But if they were ever to apply for a commercial loan they would begin to look more favorably on the residential loan application and approval process. Because of the larger sum of money involved and the greater risk and volatility in the commercial real estate market, commercial loans and the application process can be very intense.

When a consumer applies for a mortgage, the lenders first concern is their income and its stability as well as their debt load. Consumer’s debt should be no more than 45% of their income. But commercial lenders are more interested in the ability of the property to generate income to pay the loan. This is called a Debt Coverage Ratio and lenders prefer to see the ratio at 1:1.25 at the least. This means that the income to cover the loan payments is relatively secure.

A down payment on a home is somewhat negotiable and in some cases is very, very small. But due to the increased risk associated with commercial loans, these down payments are normally 20%. This gives the lender the added security of knowing that the property is valued at 20% more than the initial loan amount. Even in the event that the borrower defaults early in the loan, chances are good that the property is still valued at the full payoff on the loan.

Time Is Critical for Commercial Loans

A normal residential mortgage loan can range from 15 years to 30 and some even stretch as far as 40 years. But a commercial mortgage loan rarely exceeds 10 years. This is because lenders want to decrease the risk of the loan by getting their money back faster. In addition, consumers can pay a mortgage loan off early and save some of the interest that they would have paid over the term of the loan. This is not the case for a commercial mortgage. And in fact, there can be penalties which must be paid called prepayment penalties. In more cases the penalty decreases the further into the loan you progress. But the lender wants to be sure that they make their desired profit, or earning, on each commercial loan they write.

Not Really Even Similar

A consumer mortgage and a commercial property loan are only similar in the fact that it is a loan to purchase property. The dollar amount of most commercial loans is substantially larger than the average home loan. In addition, commercial real estate values are very volatile and can change drastically and very quickly. This is an added risk for the lender. Due to these increased risks, lenders are much more particular about the loan applications which they approve and the terms for which they will offer the loan. Having a good understanding of the lenders approval criteria can save a borrower a great deal of time in completing lengthy commercial loan applications if they don’t meet the lenders criteria.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Saturday, March 17, 2018

Why There are Mixed Signals for Commercial Loans in 2018

Many are optimistic for 2018 to be a great year when it comes to commercial loans, but others are also preparing for some bad financial scenarios to hit this year.

The multifamily market on the west coast could be a cause for some concern. Rental rates have increased, causing the market to be unsustainable. Also, there is stiff competition among lenders, which leads to many dealing with commercial loans to expect an intense 2018 among lenders.

Because of this tough competition, lenders are starting to take more risks by approving higher-risk commercial loans. And if the market takes a turn for the worse, this could put many lenders in a bind. Even though signs do point to a stable 2018, lenders should be prepared in case of a sharp turn.

But the majority in the industry think that momentum from 2017 will carry over into 2018. They also this that not only will there be stability, but that the commercial industry could even see a 5 percent increase.

Many are optimistic for 2018, but some of the issues could be the start of a downfall in the market.

The issues with stiff lender completion and increase in rental rates could be the start of the marketing taking a turn for the worse. It might take a couple of years, but the impact could start in 2018. Especially if the issues continue or if new issues come up.

Some bad signs are also hitting office properties and retail stores.

More people are starting to work from home, which is becoming a bad sign for office properties. With people using their home as their office, there is no need for office spaces, which is leading to a higher vacancy. Retail stores are also starting to lay off more employees, which is another bad sign. That means that they could be on their way to going out of business, leading to the vacancy of even more spaces.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

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Saturday, June 2, 2018

Hard money loans are not as intimidating as many borrowers have come to believe. Understanding the benefits of hard money loans Arizona will clarify why they are a very useful financial tool.

Credit is Not an Issue

A Financial Tool

Monday, May 28, 2018

Understanding what hard money lenders Arizona require to fund a loan will make your application process fast and easy so you can move forward with your real estate investment deal.

Hard Money Down Payments

A Good Option When Used Correctly

Wednesday, May 23, 2018

Understanding hard money loans Arizona will provide investors with an additional lending resource when they are interested in investing in real estate. It will also greatly reduce the time involved in securing funding.

Wednesday, May 9, 2018

Saturday, March 31, 2018

Selecting hard money lenders is very much like finding any other service provider to work with. The success of your loan and business relationship relies on your due diligence.

Friday, March 30, 2018

Applying for commercial loans is normally a long process. It is important to avoid raising red flags to keep the process as stream lined as possible.

Be Realistic

Avoid Any Unnecessary Issues

Sunday, March 25, 2018

A hard money loan (or an asset-based loan) offers you the benefits of flexible terms and quick approval. Learn why you should consider this type of loan for your next fix and flip project.

Saturday, March 24, 2018

When you are seeking a private loan, it can be helpful to learn to think like hard money lenders do. This will help you to prepare for the process and to know which information will be critical to the decision to fund or reject your request.

Know the Critical Term

Think like a Lender

Friday, March 23, 2018

Knowing what commercial real estate lenders are looking for on an application will be very helpful when you are ready to seek a loan. Some of the information could surprise you.

Your Personal Promise

Know What Lenders are Looking For

Wednesday, March 21, 2018

Due to the dollar amount of most commercial real estate loans, the criteria to qualify is more stringent. It’s important to understand these requirements before you apply for a loan.

Understand What Lenders are requiring

Due Diligence

Becoming a Personal Guarantor

Understand the Lenders Goal

Tuesday, March 20, 2018

Knowing the differences between commercial loans and residential loans will help you to understand the lengthy process when applying for a commercial loan.

Time Is Critical for Commercial Loans

Not Really Even Similar

Saturday, March 17, 2018

Many are optimistic for 2018 to be a great year when it comes to commercial loans, but others are also preparing for some bad financial scenarios to hit this year.

Many are optimistic for 2018, but some of the issues could be the start of a downfall in the market.

Some bad signs are also hitting office properties and retail stores.