Does your latest project need a Arizona commercial hard money loan?
Read on and learn some of the things you need to know in order to evaluate if your latest venture would be better funded by these types of loans. You need to know the differences for starters between them and traditional lenders.
Commercial loans are taken out for everything from hotels and apartment buildings to office high-rises and hospitals. Overall most all commercial loans made through hard money are secured by real estate collateral only. The loan-to-value amount can be up to 70% of the property value with an interest rate averaging around 7.99%. Origination fees can be around 1.75. One of the best things about these loans is the absence of a prepayment penalty—if you are eager to pay off your loan early and have the funding on hand, there will no charge for it as is often found in other more conventional funding arrangements. Repayment periods can be up to 36 months, but not longer than that generally.
Two other pleasant positives are the lack of an income requirement and no minimum FICO score, two things that a bank or a mortgage company always look at first--hard and long--before going any further with an application.
Throw in the smaller amount of documentation required and the swift turnaround to closing once you are approved and things begin to look really good for your project that may not have gone so well thus far because sometimes despite meeting all the qualifications one of two small glitches will decimate your chances with conservative lenders such as the older more established banks.
If are that good, you wonder, what are the negative factors? There when you need them, yes, however, you need to study the possible disadvantages of these loans also.
The following four reasons are why this funding is often described as not the best of choices in the list of available loans:
1) Down payments: down payments are higher here, particularly when the borrower’s credit score is low. They can be up to 25 percent. Sometimes, but not often, the down payment can be in the same area as banks.
2) Fees: defined by point, fees can be two to four percent of the total loan; banks do not charge these.
3) Higher interest rates: these loans can have an interest rate ranging up to 10 percent higher than a bank or mortgage lender.
4) Shorter repayment period: unlike banks which set their payback periods up to five years, these loans are pretty well set on return payments finishing out at the end of three years.
The old expression ‘Do your homework.’ fits very well here—a would-be borrower needs to look at all the facts and familiarize themselves with both sides of (and most other things, too) before taking one out.
Use the computer to find the facts, show a trusted friend or professional your true situation and ask their advice. If you are certain you can handle this funding afterward, get out there and find the lender that best suits your situation who can help you succeed in your ambitions.
Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
[email protected]
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
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 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
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