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Commercial Hard Money Loans – Debunking The Myths

While commercial hard money loans might sound as if they come out of a Mafia movie, there is nothing dangerous or especially risky about being granted one of the many commercial loans that are on offer by the different independent financial institutions.

What are Commercial Hard Money Loans?

The word ‘hard’ can be misleading for many people who are applying for this sort of financing. All that it means is that the loan is guaranteed by an asset or a piece of immovable property. The loan will be granted on the strength of the value of the asset in question. Many developers use these type of loans when they are attempting to develop a piece of land into a commercial property that has investment potential as well as the potential of future earnings that will more than cover the loan amount.

The value of these loans is that they are usually funded by private investors. It is worthwhile finding a company who is able to match up potential investors to loan applicants. They will ensure that the loan is completely legal as well as being secured by the property itself and not the personal assets of the owner. Most of the private investors in America today are likely to be private firms who consider that issuing commercial hard money loans is a way of doing business that guarantees them a substantial return on investment. These loans are not usually granted over an extended loan term.

This type of loan is not like a conventional mortgage that is repaid over 30 years. The term is usually between 1 and 5 years and the interest rates are much higher than a conventional loan. While the top end of the scale of interest rates can reach up to 15 % it is still a way of obtaining finance for an investment without having to wait for months or go through an extensive process of paperwork and credit checks.

It is always wise to remember that commercial hard money loans will not cover the full value of the property and it is unusual to find any commercial hard money lender that will over about 60% of the value of the property. If you are buying property then you will have to fund the difference from another source or be prepared to fund it yourself. Commercial hard money loans are granted based on a logical and achievable plan to pay the money back on time and most commercial hard money lenders will need to see a considerable amount of property related experience.

They will not be inclined to lend money to first time investors, unless the risk is very low. Commercial hard money loans are a solution to investment opportunities that many banks have refused due to the economy.

Residential Hard Money Loans Are Easier To Obtain and Can Be Approved Quicker Than Traditional Loans

For anyone seeking residential hard money loans, time is of the essence. The major reason that people seek this kind of unconventional financing is because banks simply take too long, or they are unable to meet the increasingly strict criteria that the lending institutions put forth.

There is some confusion over what the money can be used for. One reason for the confusion is that lenders and brokers use different terminology. In some cases, they mean to confuse the borrower. In others, they simply forget that everyone is not as “savvy” as they are. Below, you will find some common terms used by financers and what those terms usually mean.

Acquisition loans are hard money home loans used to purchase a property. The amount available will vary depending on the lender. It is usually a percentage of the appraised value. Commercial banks typically require that you have around 20% of the purchase price. Else, they will charge a higher interest rate. Private lenders may be able to finance the entire amount and the closing costs are usually lower.

Construction loans may be used to build a residence, but they can also be used for repairs, expansions or upgrades. Current homeowners or real estate investors may be interested in these types of hard money home loans. Conventional lenders typically require that the property in question is or will be your main residence before they will approve financing. Private lenders are usually more flexible.

Mezzanine loans typically refer to residential hard money loans that are similar to second mortgages, but the term may also be used to refer to specific kinds of business loans. Mezzanine loans are short term, typically three years or less. The funds may be used for a variety of reasons, including “buying out” a business partner. The amount that you can borrow depends on the resale value of your home or business, minus the amount of other outstanding loans, such as a first mortgage, in other words, the amount of equity that you have.

Asset based hard money home loans may be used for any purpose, as long as you have collateral or assets to “put up”. Conventional lenders refer to them as secured loans. The primary difference is the time that it takes to complete the loan, but there may be other differences. If you have collateral, private lenders may not be as concerned by your credit score. For conventional lenders, a less than perfect credit score may end up costing you thousands of dollars more, because of higher interest rates, if they will approve the loan at all.

Bridge loans fill in the gap when permanent financing solutions are in the works, but the actual purchase needs to be completed quickly. Bridges may be commercial or residential hard money loans. The funds can be used for practically anything. Depending on the lender, there may be no limit to the amount you can borrow. The funds are made available to you quickly. But, bridge loans are very short term solutions, typically not more than 6-24 months. So, you need to know where your long term financing is coming from.

Both private and commercial lenders might use other terms that you do not understand. The best advice: When you do not understand, ask for clarification. As mentioned above, some lenders simply forget that everyone is not familiar with the “lingo”. If a lender is unwilling to explain something to you fully, then you should probably seek another source for your residential hard money loans.

Finance Payday Loan – Still An Option With Bad Credit

The day you wake up and realize you are in financial trouble makes you not want to get out of bed. You’ve been a good manager of your funds, you haven’t been extravagant, you’ve kept all kinds of records and your wife is still mad about not going on that Hawaiian vacation year before last – and yet now you’re one of those “everyones” who finds himself needing financial help. It was all those days off work that your insurance didn’t pay for that finally drained you to the point of ruining your credit. But all is not lost because there’s something called a personal finance payday loan designed just for you.

So if you’re tapped out on your master card cash advance or your home town cash advance, these loans are a most welcome option for people finding themselves over their heads in debt but still willing to pursue every avenue to work their way back to good credit status. As with any loan, there must be a clear understanding of all the loan requirements and restrictions as well as a definite plan for repaying the loan without default. What we’re saying is that with responsible use, this personal loan may not only get you through your financial crisis, but may also be the means of repairing your credit history.

It may surprise you to know that one rather small city recently had 2,600 foreclosures in one month and these statistics unfortunately are being multiplied throughout the country; so please understand you are not the only “everyone” who does have and is now having some kind of money problem. And the lenders have finally awakened to that fact, have now jumped on the rescue wagon and are offering loans to help responsible persons such as yourself with their problem.

All lenders are different and have different requirements for granting their loans. Some lenders may take into account the purpose of the loan, others may not even ask why you want the loan. The main concern of lenders is to make sure they get your business, first of all, and then to guarantee payments come in each month and on time, not a minute late. So they probably will take a close look at your employment history and monthly wage. Yes, they want your bad credit business because there is competition in the lending market and because lenders now realize that good people make financial mistakes and they are more anxious now to cater to those within this category of borrowers.

As you probably know,loans are either secured or unsecured; secured loans being ones backed up with collateral and unsecured being those without anything offered for security in case of default in payment. The personal finance payday loan we’re talking about is an unsecured loan meaning there is no collateral required. Therefore if you should default on your payment,you haven’t put up your home or any other possession of value, so the only recourse the lender would have would be to take legal action. However, if you owned a home, that still would be protected by law if such action occurred.

Be prepared of course to pay a higher interest rate and fees if you are getting an unsecured bad credit loan from a local lending source, depending on your employment and credit history and on your repayment potential. With a secured loan, having put up your house or other equally valuable property, your chance of getting far better terms and interest rates is greatly improved. Better yet, going online and researching lenders offering the best terms will usually bring you greater results in the quickest time.

Something else to consider is getting a personal loan for the purpose of consolidating all your debts into one. By carefully calculating your income, living expenses and an affordable loan repayment you could not only solve your need but also begin the process of restoring your credit. You see, this works by taking out a loan that you can afford to repay monthly without defaulting, pay off all other debts and then in the process of making your monthly repayments on time, your credit score is being improved. Hopefully, by having consolidated your debts, you will be able to manage your finances more successfully.

Whatever your reason for taking out a loan, whether it’s a secured or unsecured finance payday loan, it’s important to understand that this is not only to meet your present need for money, but is also to raise you from your present status of bad credit to your desired good credit status. Therefore, we urge you to be committed to do your research, settle on the most reliable lender with the best terms for you, and then concentrate on keeping debt free.