Seeking a Hard Money Commercial Mortgage Loan? – Here’s What You’ll Need to Get Approved
Privately funded, often called “hard money” commercial mortgage loans are equity based loans written by privately owned lending companies or wealthy individuals. The loan approval process is fairly straight-forward when compared to conventional, institutionally funded loans, but private lenders have lending standards and loan parameters just like banks do. To secure an approval and get your deal funded you’ll need to understand what hard money lenders need to see in a loan request.
Equity
Private commercial mortgage loans are essentially equity loans. To be considered for funding by a hard money firm, a building or project must have significant equity. Land deals are usually done at 60% LTV or less. Buildings can receive offers of up to 70% LTV depending on the quality of the asset and its income production.
Large down-payments and/or hefty 2nd mortgages are frequently required by private lenders who will, generally insist on being in 1st position with a low LTV.
Cash
In today’s challenging credit environment, it is not reasonable to ask a lender to participate in a deal that is 100% financed. Regardless of the amount of “soft equity” in a property, virtually everyone, even hard money people, are asking that borrowers have a significant “hard equity” (cash) stake. Most private lenders are looking for at least a 10% cash investment by the principle borrowers. They will simply insist that their clients have something to lose if the deal goes south.
Exit
Hard money loans tend to be short term loans. 6-36 months is standard. Before they approve you for a mortgage they’ll want to know exactly how you intend to pay them back when the loan matures. If your plan is to sell the property, you’ll need to prove it’s marketable and have a sound strategy for finding a buyer. If you intend to refinance the private loan with a more conventional mortgage, you will need to prove that the project will qualify when the time comes.
Private Lenders
The private commercial mortgage lending process is a simple process, but that does not mean that it’s easy to get a deal done. A project must have a decent amount of equity, a cash investment will be asked of all borrowers and it is imperative that the exit plan is well thought out.
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No Nonsense, Private (Hard Money) Commercial Mortgage Loans by MasterPlan Capital LLC – Close in 14 days or less! Loans from $1MM+ for Purchase, Refi and Construction/Development. Easy, Online Application, Quick Answers, Professional Service
Mr. Fydenkevez is a 20 year veteran of Wall Street and has served as an office at one of the worlds largest investment banks.
Posted on June 22, 2009 | Under Commercial Finance Loan | 6 Comments
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6 Responses to “Seeking a Hard Money Commercial Mortgage Loan? – Here’s What You’ll Need to Get Approved”
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Depending on what state your in things may be different. If you are in CT,MA,RI,or ME give me a call 508 496 1095
Right now this is going to be a difficult task if you want cash out any equity. If you only want to refinance in order to get a better interest rate or a lower payment, you should have no problem if your fianancial statements are in order. Always make sure that show as much income on your tax returns that you can handle. I am self employed and I try to pay more taxes that I probably have to. I know that is sounds crazy, but if you want to expand in business, you have to show some profits.
http://www.peoplesbancorp.com. Call Rick Lentz @ peoples bank. I have worked with them on several projects and they have a down to earth quality I like. They do commercial and residential and are looking for new clients.Oak Hill Banks is another good lender that is easy to work with.They have several branches also. We work with the one out of Chillicothe and the contact is Jeff Doles.
I recommend that you talk to an attorney who specializes in real estate law.
I am concerned that you are asking about purchasing a house when you are already in default and cannot afford those payments.
How will you make the payments on a house if you cannot make your payments now?
Let's start with the first question first. It is POSSIBLE to get one loan to cover multiple properties for purchase. I honestly believe that there is a lender for everything these days. Now, as to whether or not it would have to be a commercial loan, that depends on the property. How many units is each property? If it is more than 4 units it is considered commercial and will have to be sent to a commercial lender. If your looking for a broker to help you out don't hesitate to email me. I do a ton of constructions loans every month. Send me an email and if I'm licensed in your state I will be glad to help, if I'm not licensed in your state than maybe I can recommend someone who is licensed in that state. Good Luck!
hi