Things To Know Before Taking A Loan

January 10, 2022/in Blog /by Bruce Kent

If you’re thinking about applying for a loan, you need to know everything about the process to avoid making mistakes and connect with potential lenders.

Lenders will ask you for many details, such as your earnings, credit history, and ratings, and will require further analysis before you apply for a loan.

Let’s have a look at what you should know and why you should know it before you apply for a loan.

Credit Score and History

Solid credit history and credit rating demonstrate to creditors that you will pay your debts promptly. The stronger your credit, the more likely you are to get a loan with the best terms.

These terms can be highly favorable for you over the life of your loan, helping you save thousands of dollars.

Therefore, before applying for a loan, it’s best to check your credit score and report inaccuracies that could lower your score and increase the chances of your loan being rejected.

If your credit isn’t in good shape, you should avoid applying for a loan if at all feasible. Meanwhile, work on improving your credit to potentially save thousands of dollars.

Income

Since your ability to repay a loan is influenced by your take-home pay, you’ll need to provide proof of income along with your application. You’ll need to submit a salary letter from your employer, W-2 forms, and stubs.

If you’re applying as a self-employed person, you’ll need receipts, invoices, and tax returns from the last two years.

Remember to mention all of your sources of income, including your freelancing income, income obtained from second-job, child support, spouse’s income, and not just your principal one.

Monthly Debt Payments

Your income is only one factor to consider; you must also be aware of your monthly financial commitments. You won’t be able to pay off a new loan if your monthly income is $4,000, but you spend $3,500 toward your obligations each month.

A loan application would almost certainly ask you to identify specific responsibilities, such as your mortgage payment or rent, as well as any existing credit card or other debt payments.

Liabilities and Assets

Your net worth, or your assets minus your liabilities, is something that your potential lender might consider.

Liabilities are financial responsibilities, such as your student loan debt. Assets are the things you hold that are worth something, such as your properties or investment accounts.

Your net worth will determine if you’ll be able to pay off the loan or not if any problem occurs. The loan you’re requesting will also turn into a liability that you can use to buy something else.

Calculating your net worth and how it will evolve if you acquire the loan is an excellent method to stay on top of your finances.

If you’re looking for commercial loans for your next investment, contact Commercial Private Equity.

At Commercial Private Equity, we provide private specialized loans, including construction loans, workout loans, raw land loans, and bridge loans. To make loan acquisition easy for our clients, we also have a three-level loan program with different loan requirements.

Contact us now to make your dream investment project come true.

Things You Need To Know Before Applying for A Land Loan

January 6, 2022/in Blog /by Bruce Kent

Going for a land loan is the best option when you want to finance raw lands for investment purposes. But it isn’t as simple and easy as applying for a mortgage. It brings forth unique challenges for potential buyers.

This blog details three things you need to consider when applying for a raw land loan.

Land Basics: Access, Zoning, and Boundaries

The lender will evaluate if the deal you’re getting is profitable or not. Therefore you must have surveyors draw the borders and design a blueprint for you to present to the lender who’d then analyze your project and decide accordingly.

Clear-cut boundaries will help the lender have a better idea of the property which would otherwise have been missed out during evaluation. Double-check land-use regulations and zoning before submitting the final report to the lender to avoid discrepancies.

Access to Basic Utilities

Access to utilities is another significant consideration for residential sites. Lenders will readily help you invest in properties that have adequate electricity, water, sewer, and cable installments. To save you time, you must submit all the documentation and certification needed for the essential utilities.

Always check with the local planning authority to see what the future holds for your area. A new family spot across the street has the potential to increase property prices in the coming years, whereas a sewage treatment facility or a highway is not profitable. Presenting profitable plans might help convince your lender to invest in the property.

Land Use: Immediate Construction, Improvements Required, Speculative Investment

The loan terms, such as interest rate and down payment, are mostly based on the land’s intended use. Therefore, getting a land loan is usually more challenging and stressful than getting a mortgage for an existing house.

This is because an existing home provides the bank with tangible and instant collateral, whereas new construction has a higher risk of things going out of hand.

It’s better to have land that’s ready for construction as it’s next in preference to existing homes by the banks. Things can go wrong, cause delays, or cost more than the intended budget, but it is still possible to achieve the desired outcome in the long run. The down payment is usually 15-20% of the total amount.

Undeveloped land with no plans to develop it is simply a speculative investment for the future. A project in this manner, for example, could entail purchasing land as a new motorway is going to be developed nearby.

So when the motorway construction is complete, the expectation is that the site will appeal to developers looking to establish a new community with a quick commute into the city. As a result, the land might subsequently sell for a profit. For such speculative investments, a down payment can reach up to 50%.

If you’re looking for land loans for your next investment, contact Commercial Private Equity!

At Commercial Private Equity, we provide private specialized loans, including construction loans, workout loans, raw land loans, and bridge loans. To make loan acquisition easy for our clients, we also have a three-level loan program with different loan requirements.

Contact us now to make your dream investment project come true.

A private lender giving out a loan to a borrower

The Pros And Cons Of Blanket Mortgage

January 5, 2022/in Blog /by Bruce Kent

A blanket mortgage, also known as a blanket loan refinance, allows you to consolidate two or more mortgages into one. This means you can finance multiple properties under one loan. This is particularly helpful for real estate investors who might find handling loans for multiple properties a tedious or costly task.

If you’re considering getting a blanket loan for your real estate investment, here’s a breakdown of the pros and cons of blanket loans that you need to know.

Pros of Blanket Loans

1. Lower Interest Rates

Different mortgages mean different interest rates on various properties, some of which may be highly unfavorable.

A blanket loan allows you to consolidate all your debts into a single loan with a single interest rate. To make consolidation more tempting, lenders frequently offer interest rates even lower than what you are currently paying.

2. More Leverage

Leverage is the use of debt to boost the possible return on a more valuable asset. A blanket mortgage can offer more leverage than a standard mortgage because it can buy more than one property at a time.

For example, you take a loan of $300,000 to buy a property that gives you a return of $5000 every month. If you spend the same amount buying three properties, you can get a monthly return of $7000-$10000, which is significantly more than investing in a single property.

Cons of Blanket Loans

1. Higher Down Payments

A real estate investor looking for a loan for several real estate assets can always walk away from a bad deal, leaving the lender with nothing.

To cover this risk, lenders set higher down payments for blanket mortgages. Furthermore, even if the percentage is the same as for a regular mortgage, a blanket mortgage will almost certainly require a greater amount of money, to begin with.

2. Unfavorable Terms For Balloons Payments

Sometimes lenders offer blanket mortgages with balloon payments. This means that the borrower is required to repay the entire amount in a shorter period, with the final payment being a single lump sum.

This puts real estate investors under pressure to find additional cash or sell the properties they intended to resell later for higher profits.

If you’re looking for commercial hard money lenders to finance your multiple real estate investments, look no further than Commercial Private Equity.

With more than 75 years of experience, we help you find the most cost-effective funding source for your real estate investments with our specialized loans and programs.

Contact us for more information today.

The Ultimate Guide To The Underwriting Process

December 29, 2021/in Blog /by Bruce Kent

If you’re someone who invests in properties often and uses mortgages to finance your purchase, this blog post is probably what you’re looking for.

Mortgage lenders assess your creditworthiness via a process known as underwriting. This process determines whether it’s safe to approve your loan or not. Here’s all that you need to know about it.

What Is Mortgage Underwriting?

A mortgage lender assesses the risk of lending money to you through the underwriting process. Whether you’re borrowing from a private lender, a bank, or a credit union, they will assess if you’ll be able to repay the loan or not before approving your mortgage application.

This involves collecting the necessary documents for your application, such as your financial assets, income, equity investment, cash reserves, and other risks involved, and then verifying the information you’ve provided.

What Does A Mortgage Underwriter Do?

A mortgage underwriter will assess the delinquency risk in approving your loan. That is, it’ll look into the overall risk if you’re unable to repay the mortgage.

For that, the underwriter evaluates factors that determine your financial position, such as your credit report, credit score, and the property you’re considering buying.

The underwriter will document their assessments and weigh different elements and aspects of your loan application as a whole to finally decide if the risk is worth taking or not.

The loan can still be approved if a borrower falls short in any one area based on the strength of the other factors involved in determining the approval.

How Long Does Mortgage Underwriting Take?

The mortgage underwriting process can end in a few days or even take a few weeks, depending on whether the underwriter needs any additional information to access your application and how streamlined and transparent the lender’s practices are.

The quicker you submit your documents, the faster and smoother the process will be. However, underwriting is just a part of the overall lending process. You’ll only get loan approval and not the amount when done with the underwriting process.

If you’re looking to get a hard money loan, look no further than Commercial Private Equity. From construction loans to commercial property loans, we’re here to fund all your projects.

Apart from loans, we also provide commercial hard money loan consultation to guide you on the best practices for borrowing and repaying the amount.

Contact us to get your hard money loans sorted.

The Do’s And Don’ts Of Buying A Raw Land

December 27, 2021/in Blog /by Bruce Kent

Buying vacant land is the best way to invest your money. You can also grow your business by building commercial or residential structures on the location.

But before you get into this journey, it’s essential to consider the various aspects of buying raw land to prevent your dream project from turning into a headache and, ultimately, your worst nightmare.

Consider the following dos and don’ts to avoid buyer’s remorse.

Do Hire an Agent to Find the Land

A real estate agent who has extensive experience can help in navigating and negotiating land deals. Don’t entirely rely on them.

Do your research and reach out to an agent who has previously worked with both buyers and sellers for land transactions to avoid any legal issues in the buying process.

Do Have Your Finances in Place

Before seeking to purchase land, you must know how much you can afford to spend. Remember that land purchases are primarily made in cash.

Therefore, determine your budget by looking at the cash you have in hand and then look for properties accordingly; that’ll help save you time and effort.

Don’t Skip the Environmental Tests

Like background research for a home, vacant land also needs to be well-researched, tested, and checked to ensure that the place is suitable for the purpose you’re buying it, and most importantly, you’ll be able to build on it.

Check the soil for contamination by conducting environmental tests because if the soil is contaminated for any reason, residential or commercial structures can’t be built there.

Don’t Forget the Survey

If the land has been vacant for years, there are chances the neighbors, whether intentionally or not, may have infringed it beyond the property lines.

To identify clear-cut boundaries, you must have a surveyor look at your property. A land with a completed survey, geology, and soils report is the best one to go for.

If you’re looking to invest in raw land, hard money loans are the best option to finance your investment. Commercial Private Equity is a leading commercial private money lender based in Atlanta, GA, for commercial bridge loans.

Contact us to finance your project.

private money lenders can help finance real estate properties

Are Hard Money Loans Worth It?

December 21, 2021/in Blog /by Bruce Kent

The rumors of hard money lenders being shady and having high hidden interest rates have been circulating for a long time now.

A few investors still fret when considering working with hard money lenders. However, with various states making licensing compulsory and putting strict regulations on hard money lenders, the situation is favorable now.

The advantages of hard money loans outweigh all the other conventional lending options available, proving to be highly rewarding for borrowers.

This blog will shine a light on the benefits you reap with hard money loans.

Your Loan Applications Are Approved Quickly

Banks and other traditional sources require a lot of documentation and reassurance. They’ll ask for your credit accounts details, income, business details, and whatnot to proceed with the approval.

If anything isn’t up to the mark, they’ll reject your application for a loan. If approved, there’s still a long way to go until you’re funded.

This pushes the investors to see the help of hard money lenders. Although they also keep the property as collateral before approving your loans, they aren’t interested in your credit. If the loan amount is equal to the value of your investment, you’ll get the loan.

They Process Loans Swiftly

A bank will take approximately 30 days to grant the loan, which is a large time frame for real estate investors as the property values fluctuate daily.

On the other hand, hard money loans are processed in no time compared to conventional bank loans. Therefore it proves to be an attractive alternative for investors as they can seal more investment contracts with hard money loans within the same timeframe.

Hard Money Loans Are Convenient

In today’s time, people ready to pay more to get good services. The low-interest loans provided by the banks might attract the borrowers, but the requirements of tax returns, bank statements, leases, and income documentation, ultimately drain them out.

Real estate investors, in particular, do not favor these time-consuming processes and gravitate towards hard money loans instead.

They might charge you slightly higher interest, but your loan will be approved quickly with no hassle of document collection and submission.

Are you looking for hard money loans for your next investment project? Commercial Private Equity is here to help you out.

From providing hard money loan consultation to closing your loans, we guide you through each step to make money lending a smooth process for you. We’re one of the most reputed private commercial real estate lenders in Atlanta, GA.

Contact us now for more information.

man filling out a hard money loan application

Foreclosure: Everything You Need To Know

December 15, 2021/in Blog /by Bruce Kent

A legal action that lenders take when borrowers default on their loans is called a foreclosure. If you’ve borrowed money and are facing foreclosure, you can face long-term consequences.

In such circumstances, a hard money lender comes to your rescue by offering loan modifications. They try to modify your monthly payments to make them more affordable for you. However, they’ll also receive some monthly payments. Here’s all you need to know about the process:

What Is Foreclosure?

When you take a loan, you agree to the lender’s condition of reclaiming the property if you stop making payments on your loan. The foreclosure process can be non-judicial or judicial, depending on your state laws. Some even have both options available.

In a judicial foreclosure, a lawsuit is filed by the lender for a foreclosure. The court will then inform the borrower, who then fights the lawsuit; if they lose, the property is auctioned as a foreclosure by the bank or the lender.

In non-judicial foreclosures, if the borrower stops making payments, the power-of-sale mortgage clause helps recoup the balance owed by the borrowers. It authorizes the trustees (appointed by the lender) to sell the property to pay off the balance. The process is faster than under a judicial foreclosure as there is no court hearing.

When Does Foreclosure Begin?

When they fail to repay their mortgage installments, borrowers usually go through a series of steps before they face foreclosure. Defaulting your repayment agreement with your lender and failing to repay using alternative arrangements will result in foreclosure.

The repayment conditions are mentioned in the agreement you signed as part of your mortgage commitment. Be careful to refer to your agreement for particular rules governing your mortgage, as these agreements may differ by jurisdiction and lender.

What if the Property Sells for Less than I Owe?

If your property sells for less than the balance you owe to the bank or the lender, the lender files a deficiency judgment. It’s a lawsuit that requests the borrower to repay the remainder of the loan amount.

For example, if you owe $500,000 on your loan, but the property only sells for $375,000, $125,000 is still deficient. The lender then tries to recover that amount from you in terms of cash or any other payment method.

However, some states restrict deficiency judgments after foreclosure and have anti-deficiency laws.

Looking for private money lenders in Atlanta, GA? Get in touch with Commercial Private Equity. Apart from loans, we also provide commercial hard money loan consultation to guide you on the best practices for borrowing and repaying loans.

Contact us to get your hard money loans sorted.

private money lenders don't require good credit scores or repayment records

Why Choose Hard Money Loans Over Traditional Lending

December 13, 2021/in Blog /by Bruce Kent

The process of applying for a hard money loan is similar to that of a traditional loan. If it’s approved, you’re given a loan. You’re then required to repay the amount with interest over a predetermined time.

However, getting conventional loans can be challenging and time-consuming; the bank has stringent criteria that you’ll need to meet. That’s when private money lending steps in. It’s a more appealing option for commercial investors because of the relaxed rules and regulations.

This blog will guide you about those relaxed rules and how you can benefit from them.

Speed of Approval and Funding

Hard money loans are approved faster than conventional bank loans. On average, your bank will take around 30 days to approve your application. Once the bank approves the application, it’ll take additional three business days to fund your loan.

This is a disadvantage for property buyers as the seller might not wait long to get your loan approved.

On the contrary, hard money loans can be funded in seven business days. The hard money lenders are aware of how crucial time is for real estate investors, so they process approvals quickly.

Debt to Income (DTI) Ratio vs. Loan to Value Ratio (LTV)

Creditworthiness is a crucial factor in the approval of your bank loan. Banks will look into whether you have enough money to repay it or not. This is why they look into your salary slips, employment proof, and your account’s credit report.

Using the documents you provide, a DTI ratio is calculated by dividing your monthly debt payments by your monthly gross income.

For example, if your gross income is about $8000, and your credit card bill is about $2000, this means your DTI is 25% (2000/8000 * 100). Banks usually require a DTI of less than 45%.

On the contrary, the soundness of the investment for which you’re taking a loan is what interests the hard money lenders. They look if the value of your investment asset can cover the loan they’re providing or not.

This is why they look into property appraisals when considering your loan application. Using the information you provide, an LTV ratio is calculated by dividing your requested loan amount by the appraised value of your asset.

For example: If you need a loan of $60,000 to buy a property, and the value of that property is expected to reach $100,000 at the time of your repayment, your LTV ratio is 60% (60000/100000*100).

The smaller the LTV ratio, the profitable it is.

Reach Out to Commercial Private Equity for Hard Money Loans

If you’re looking for commercial hard money lenders, look no further than Commercial Private Equity. With more than 75 years of experience, we help you find the most cost-effective source of gathering short-term capital.

Contact us for commercial hard money loans to boost your real estate business.

Things to Consider when Building your new office – Infographic

December 8, 2021/in Blog /by Bruce Kent

It’s important to do your research during the office buying process for your business; you can’t believe everything you hear.

Before you break the ground and start pouring the foundation, you need to take a few considerations into account.

4 Questions You Need To Ask Your Hard Money Lender

November 18, 2021/in Blog /by Bruce Kent

If you’re opting for hard money loans for the first time, you might be confused about who to trust.

Asking them a few questions will help you ensure that the hard money lender is trustworthy and credible. That’ll also help you avoid getting into an unpleasant situation with a hard money lender who adds hidden fees to your loan at the last minute or doesn’t deliver on time.

Any suspicious answers indicate you need to find a different hard money lender. Here’s what you need to ask them.

What Interest Rates Do You Offer And How Many Points Do You Charge?

Points and interest rates are the two factors that determine the overall cost of your loan. These depend on the region and the riskiness of your project.

Interest rates are usually 10% to 15% on hard money loans, with points ranging from 2% to 4% of the loan amount.

Is There Any Other Fee That’ll Be Charged on Your Hard Money Loan?

The upfront fee is another crucial factor you need to inquire about to ensure no hidden charges are applied.

If you fail to ask your lender this question, there’s a possibility they might charge you a lending fee that you didn’t know about.

Document fees and appraisals are customary, but some lenders even charge you an additional amount apart from the interest for lending.

What Loan To Value Ratio Do You Offer?

In loan-to-value loans, the amount is given based on the current value of the property. However, each lender offers a different percentage. Some offer 70%, while others offer 75%; it’s really up to the lender.

The LTV percentage is also influenced by the type of property you’re investing in. For example, residential properties have a higher LTV than commercial ones.

Similarly, rural properties have a low LTV than urban ones. Vacant lands have the lowest LTV due to the risk involved.

How Long Will Funding The Loan Take?

Time is crucial for real estate investors. Hard money lenders are preferred as they fund your loans faster than any other method of financing.

They’ll approve your loan and fund you in about 2-3 weeks maximum. In some cases, they can even provide your loan in 3-5 days.

If you’re looking for a reliable hard money lender in Atlanta, GA, to finance your investment, reach out to Commercial Private Equity. We’ll guide you on the best practices to fund your projects through hard money loans.

Contact us to know more about our loans.