Getting Turn Downs For A Business Purpose Loan?
Often securing financing for your clients for business purposes or on an investment property is a challenge in the best-case scenario and nearly impossible with lots of pain points only to get a denial in with worst cases. Nothing is more frustrating for borrowers and brokers than getting turned down by a bank! A private mortgage also known as hard money loans may be the best option (especially for business purpose loans.)
The Process Of Getting A Mortgage
Usually the process goes something like this over three months trying to get your client a mortgage:
- Gathering all the personal, business and real estate financial information, for not only the property you’re trying to finance but for all his business and property interests.
- Creating projections, forecasts and read through mountains of paperwork.
- Putting together a loan package, sent it to numerous commercial mortgage lenders, only to find out each one needed the same information on their forms.
- Spending countless hours transferring information to each application.
- Chasing all the “additional information” requests from each potential interested lender and submit them for review.
The Result: You exhaust all possible institutional mortgage sources and still no loan.
Sound familiar? Perhaps you’re new to the commercial mortgage field and are not aware of other sources for private mortgages. Or, you are successful originating residential loans and decided to expand your practice to include commercial and investment property mortgages. Or maybe you already originate commercial mortgages and are successful in obtaining financing for some clients, but feel you just spin your wheels trying to obtain financing for others.
Basics Of Private Mortgages & Hard Money Lending
Key to maximizing success (and commissions) is spending your time productively and understanding when institutional commercial mortgage money is NOT available for your client; there are other financing options available for this same client.
Business purpose loans & private mortgage loans are secured by real estate made by a private lender instead of a bank. Mortgage loans are short-term (ranging from 12 months to three years) asset-based loans for the purchase, rehabilitation or equity cash out of real estate. Often these are referred to as “hard money loans”. This means that the decision to lend is based on the equity and value of the property being put up as collateral, not on the borrower’s credit. The security for the loan is enhanced because the loan represents a maximum of 65% of the appraised value of the property. Borrowers can expect to pay interest rates of 9% to 12% in today’s interest rate environment.
Why Do Borrowers Choose Hard Money Loans?
Private Mortgage Loans offers unique advantages for borrowers:
- Speed of Closing the Transactions
- Borrowers are Unable to Provide Detailed Personal Financial Information
- Borrowers Do Not Qualify for a Conventional Mortgage Loan
- Property Does Not Qualify for a Conventional Mortgage Loan
Coastal Capital continues to build its stellar reputation since 2007 with both borrowers and brokers by following through and closing transactions in both good times and bad times. You can count on us to put a smile on your borrower’s face and make sure you get paid! To learn about how we support brokers please visit https://www.coastalcapital.com/broker/ Don’t forget to check out all our great reviews https://bit.ly/3i7W2Ch.
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