Seeking A Hard Money Commercial Mortgage Loan? Heres What Youll 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 straightforward 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 youll need to understand what hard money lenders need to see in a loan request.
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Equity
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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.
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Large downpayments and/or hefty 2nd mortgages are frequently required by private lenders who will generally insist on being in 1st position with a low LTV.
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Cash
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In todays 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.
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Exit
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Hard money loans tend to be short term loans. 636 months is standard. Before they approve you for a mortgage theyll want to know exactly how you intend to pay them back when the loan matures. If your plan is to sell the property youll need to prove its 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.
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Private Lenders
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The private commercial mortgage lending process is a simple process but that does not mean that its 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.
About the writer:nbsp;nbsp;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.
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