Commercial Hard Money Loan: 3CALoan
What Does Everyone Mean by Hard Money?
A hard money loan is a loan for individuals or businesses that apply for a loan and can’t get qualified for other types of loans. Private investors or companies issue hard money loans. This type of loan is a specific type of asset-based loan financing, real property secures the funds the borrower receives. Hard money loan lenders are private investors or companies that have funds to issue hard money loan. Hard money lender should be quick to have an advantage of lending opportunities. Private investors or companies issue hard money loans.
Five Major Differences between Commercial Hard Money Lenders and Conventional Lenders
Hard money loan’s interest rates are three times higher as compare to a conventional loan.
- Upfront Costs
In the upfront cost, the hard money lender will charge 2% to 5% of the loan amount because you are using their money. In a conventional loan, you will maybe ask for 1% of the loan amount as the upfront cost.
- Loan Terms
The term of Hard money loan is just for 6 to 12 months. In a conventional loan, you can set your term of the loan as five years to thirty years.
- Borrower’s Credit
In Hard money, loans are based on equity of the property but hard money lenders will also check your flaws. In conventional loans, your credit is very important.
- Closing Time
The amount of time to close a loan process is known as closing time. Hard money loans will take 7-10 days to complete their closing process because hard money company is usually a single individual company. A conventional loan will take much more time as compare to hard money loans because they have to do inspections, underwrite the deal and many more.
Three Most Common Commercial Hard Money Questions
Does My Credit Matter?
Hard money lenders have a different process of qualifying the loan, they check the loan in three ways. They look at the area of the house, they check out the property and then they check you that if you have any foreclosures or any bankruptcies. If you have any bankruptcies or foreclosures then you may have to give some explaining to do. So you can say maybe credit matter.
Do I Need to Put Money Down?
In the hard money loans, you need to give some down payment of 20-40% depending on your loan. With this down payment, you also have to pay the closing cost up to 5-6% of your loan amount. In hard money loans there is no 100% financing, so the answer is yes you need to put money down.
What’s the Secret to Getting My Loan Approved?
You need to have a realistic investing exit strategy that everyone involved in the deal agrees with. Everyone involved would be yourself, your lender, the person you’re borrowing your money from, your property manager, and your mentor if you have one. Having everyone agree on an exit strategy will put you in the best position to get your loan approved and your deal closed.
Final Thoughts
If you are interested in exploring the options of hard money loans for commercial real estate investing. Our competitive rates, efficient services, and talented team can help ease the process of Commercial Hard money loan. We help our customers every step of the way. We prioritize informing and educating our clients about the loan process. Our client’s happiness and confidence upon closing a deal reflect our excellent quality services. To find out more information about hard money loans and how we can help, contact us at (818) 322-5626.
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