What is a Bridge Loan and Why is it Beneficial?

A bridge loan might be just the think you need to take your dreams of homeownership and turn them into reality, or to purchase a new, larger or upgraded home. Read on to learn the “ins and outs” of these loans, their pros, and cons and how they can help you.

When it comes time to making an educated and informed financial decision about obtaining a loan to by a home or to help you sell your home and buy a new one without too much financial burden, it’s time to learn about how a bridge loan can help. Let’s start by explaining what it is. This is a specialized short-term loan that “bridges the gap” between the time you sell your home to buying your new one. It is very useful when it comes to real estate transactions, as you can apply any equity in your current home as well as the loan itself, toward a down payment on a new home even before your current home is sold. Once sold, you pay back the loan with the funds earned from the sale of the first home.

These loans allow homeowners to not lose out on their new dream house because they have to wait until their current home sells to afford a down payment. It’s also nice to already be out of the current home while your Realtor is selling your home so you don’t have to worry about daily cleanings, leaving the house on show notice due to showings or having the home look “perfect” while also trying to live in it (parents may relate to this benefit…).

Another benefit is that a bridge loan is typically not difficult to apply for or obtain. Because borrowers accept a high debt to income ratio (due to the fact that they own two homes in this time period), debt and credit scores are not scrutinized as they might be with a traditional loan. There is also markedly little paperwork involved in obtaining this type of loan. But keep in mind that you will have to apply for two mortgages during this bridge period as well, so credit score is still important to keep on the up and up.

What you should know before applying for this type of loan.

There are some risks associated with this loan and you should be abreast of the terms prior to signing any official documentation. Downsides include high interest rates. Because the lender is taking a “risk” in extending you the funding for this loan, based on the sale of your current home, as well as the short-term nature of this loan, interest rates are higher. It could even reach 10% or higher. However, some lenders will allow you to skip up to four months of payment on the loan, meaning you could in fact avoid interest rates if you are able to sell your current home and pay off the bridge loan before payments come up. You should also note that there are several fees associated with this type of loan, which in total can run approximately $2,000 or more.

Is this type of loan really worth it?

Depending on your financial situation, your urgency to move out of your current home and secure funding for your new home, yes, it is absolutely worth it. But only you can determine that for yourself based on your needs as a homeowner.

Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com 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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

How a Bridge Loan Can Help You Get the Home of Your Dreams

If you’re ready to make your American Dream come true by purchasing your first home or if you are ready to sell you current home, a bridge loan can be a very useful way to make this happen. Find out more about how this type of loan can benefit you.

As new homebuyers, it’s crucial to understand that, much like location, timing is everything. Timing is also important in the instance of current homeowners looking to sell their home and buy a new home, as most buyers need the funds from their home sale to put toward their new home purchase. Lining up the exact timing of when you sell your current home to when you sign on you new home is like aligning the stars. But that’s not to say it’s impossible. Challenging yes, but that is why a bridge loan can be just the thing you need to get to the next stage of homeownership regardless of your current status right now.

A bridge loan is a very specialized short-term loan that can help in exactly this instance – when you need funds to get you from “point A to point B” as a homeowner. Even if you are able to qualify for both home loans, you aren’t able to make a significant down payment on the new home without first selling the current home, right? That’s where this loan comes in, because it can serve to “bridge the gap” from that hypothetical point A to point B that we mentioned earlier. It is in addition to your home mortgage and covers a down payment for the new home.

This typically a very short-term scenario, upon which you pay the loan off in its entirety once you receive funds from selling your current home or property. The loan is dependent upon the equity you have build up in your current home. These loans also have low debt-to-income ratios and no specific amount of paperwork requirements at the time of closing. These loans are contingent on the specific financial situation, not based on your annual earnings or your credit score, which comes as a relief to many.

What are some of the benefits of this type of loan?

These loans are very “borrower friendly” and many benefits that serve as win-win solutions for a successful transaction. Without having to have already sold your current home, you can get the new home of your dreams. It also comes in handy to be “out of the house” during the times that real estate professionals are showing the previous home. You can even stage it and possibly put it on the market for a top dollar amount. You can also delay initial payments up to four months on this type of loan so your budget is freed up to manage other expenses that come with selling and buying a home. If you are able to pay back the loan prior to that time, you won’t have to worry about an added monthly payment down the road.

When you decide that you want to obtain a bridge loan, contact a mortgage broker to help you through the process.

Now that you’ve decided that this loan is exactly what you need, its time to find the right mortgage broker to help you through the application process to ensure eligibility and a successful application submission. Do some research about mortgage brokers in your area and meet with several until you find the one you feel confident will work to find you the best loan for a win-win solution.

Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com 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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Understanding the Benefits and Drawbacks of Applying for Hard Money Loans

For business owners and property investors, there are many ways to go about getting a loan. Here, we break down the “pros and cons” of trying to obtain hard money loans.

These loans are ideal for many reasons – if you need cash fast, if you are looking to gain possession of an investment or foreclosure property that may get sold quickly or if you have been previously unable to garner a loan from a conventional lender such as a bank, you can still obtain hard money loans.

First, having a solid grasp on what exactly this type of loan is can help you determine if it’s right for you. These loans are defined by the fact that they are given by a private company. While conventional loans from a bank have a longer pay back period, you will need to provide some hard evidence that you will be able to pay back the loan and details about exactly how you intend to do so. You will likely need to have very high credit as well as a solid business plan, collateral and/or equity.

However, the good news is that with hard money loans, you won’t have to worry about a perfect credit history or any of the other bureaucracy typically associated with a conventional long-term loan with a bank. Private lenders for these loan focus mostly on the collateral you are willing to bring to the table because ultimately, if you cannot pay off your loan, your collateral will be obtained by the private lender and sold to cover the remainder of your loan debt. It’s basically the lenders way of ensuring they won’t be out the money if you can’t repay the loan. If you don’t have the collateral to back it up, lenders may start looking at your credit score and other aspects more closely.

The bottom line is that these types of loans serve a specific purpose and can be beneficial in those cases.

For people looking to obtain cash fast, who have been rejected by a conventional lender or who want a loan with a shorter duration between about three to five years, these loans are ideal. Sometimes they do not have a prepayment penalty either, so you can repay the loan whenever you want (and save on some of those high interest rates!).

There are two sides of the coin when it comes to hard money loans, which means with benefits, come drawbacks.

Some of the “cons” of this type of loan include those aforementioned high interest rates typically associated with hard money or short-terms. The typically APR is more than 10 percent of the loan amount. You may also have to work on your credit score if you don't have much collateral to put down toward the loan. All in all, if you need cash fast and aren't willing to sacrifice losing out on a great investment property or foreclosure, this is the perfect type of loan for you. If you are confident about the fact that your business can maximize potential earnings due to the loan, by all means move ahead know that you are now educated about this type of loan, and it’s pros and cons!

Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com 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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Hard Money Lenders Can Solve Your Commercial Loan Needs

When it comes to needing to secure financing for your business, hard money lenders are there to guide you through the process. They can help you find the loan you need and fast – read on to find out how.

When you think it might be impossible to get your loan approved in time to finance an investment property you have your eye on or get over a foreclosure property, it’s time to readjust your thinking. With the help of these professionals, you can get a loan fast and just when you need it for your business or investment.

You need to understand that there may be some challenges and situations that you will need to handle when working with lenders, and that there are some are work specifically in certain areas. For example, commercial hard money lenders work exclusively with one property type so you may end up working with lenders that focus more in property niches. If you’re looking for this type of loan, make sure the lender you choose deals with the specific market or property niche that you are in.

Property types that hard money lenders can typically assist with include foreclosures, fix-and-flip properties, short sales, construction loans and land loans. They can also help if you need to relocate your business in a very short amount of time, and when potential buyers’ credit applications are less than desirable.

Understand that hard money lenders are not conventional bank lenders.

With traditional bank loans, the application process is lengthy, sometimes difficult and there is a lot of “red tape” involved. If you’ve already applied for a traditional loan, or know that you won’t qualify for a loan from this type of lender, based on your credit score or history or other issue, then seeking an alternative is the answer.

Finding the right lender is an important first step in successfully obtaining financing.

When you’re in a position to know that you need this type of lender, you need to find the right one for you and your needs. You can start your search online, for lenders in your area that focus on the areas that you need to focus on based on your loan needs or business area. You might be pleasantly surprised by how much good information on reputable lenders that you can find in your initial research. You can also learn more about local lenders by attending seminars that are geared towards how to obtain hard money funding. By attending, you will have direct access to lenders in your area and can speak with them about your needs. They can give you important information about up to date regulations, requirements and answer questions that you may have. These seminars are a good way to network with like-minded people in your industry with needs similar to your own, which is a win-win solution. Once you have decided upon a lender that is right for you, you can make the process quicker by being prepared to prove the amount of equity you have, the collateral you are able to put up and your business plan for the property in question. It’s also a good idea to be prepared to prove how you will be able to pay off the loan.

Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com 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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Discovering the Pros and Cons of a Bridge Loan

Bridge loans are there when you need them. However, it’s important to find out the risks, benefits, expectations and pitfalls to make sure its more “dreams come true” than “danger beware.”

In the instance of obtaining an investment property, the market can change abruptly and things happen fast. So when you find the property of your dreams, time is of the essence to create a win-win solution. This is especially true in the case of foreclosures that generally get snapped up very quickly. That is where a commercial bridge loan comes in handy. If your current mortgage is due and you need to secure a replacement mortgage or if you lack the funds needed to finance a balloon payment of a prior loan, this type of loan can also be the answer.

First, let’s define the term bridge loan. What is it, exactly? This type of commercial loan is a particular type of short-term loan that can run the course of as little as two weeks or up to three years. It serves the purpose of being a “quick fix” when funds are needed fast. The term comes from the fact that these loans “bridge the gap” until you can secure long-term funding.

A bridge loan is a fairly straightforward loan, and the process is not too complex or difficult to apply for and get approved, and they typically do not stipulate prepayment penalties. While these loans have many benefits and advantages for business owners that need cash quickly, there are some “cons” of this type of loans so it’s important to understand what those are and if you are prepared to manage those.

It’s important to have realistic expectations about this type of loan.

As with the advantages with this type of loan, there are some stipulations that as the borrower, you need to know and be prepared to handle. One of the biggest drawbacks with this loan is the interest rates are typically higher and more expensive than long-term commercial loans. It’s important to understand the exact terms of this loan, since they can be quite short in length. Typically during the course of this loan, you are seeking a longer-term solution. With that comes the expectation of common practice that when you are able to secure long-term financing, you need to pay off or repay the remainder of the short-term loan in full. This also will alleviate the fact that you are paying a very high interest rate and likely other costs associated with the short-term loan, so it really is a win-win solution to pay off the short-term loan as soon as you secure your loan-term replacement capital.

Don’t be afraid to ask questions about your bridge loan before you sign on the dotted line.

The more educated you are about the definition, terms, “fine print” and payback structure of this type of loan, the more comfortable you can feel about moving forward with securing financing in this manner. Do some research on line and talk to a professional lender about how they can help you secure this type of loan to benefit your business.

Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com 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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

What is Hard Money?

Hard money is, simply put, money that is backed by a “hard” asset. Individuals and companies often turn to hard money lenders when capital is required to bridge assets or rapid funding is required.

At one time, hard money was thought to be synonymous with back-alley dealings with less-than-stellar individuals offering loans in exchange for 50 percent of your business, or your first born, whichever was worth more. Fortunately, that misconception is long gone. The truth is that many contractors, developers, businesses and even home owners turn to these types of loans for various purposes and in a wide variety of circumstances. These are some of the most common reasons people turn to hard money loans.

· The time to funding for a traditional lender can be painfully slow, taking up to several months in some instances. For real estate investors, contractors and developers, this time lapse could lead to missing out on that one-of-a-kind property that just hit the markets and is perfect for a build-out, rent and hold or their next fix and flip. Time is of the essence in some real estate dealings. This type of loan also allows real estate investors to move on to their next project while waiting for traditional funding or to obtain a traditional loan after the rehab has taken place.

· Home owners often find the home of their dreams before their previous home sells. In today’s market, a contingent offer based on a sale often takes a backseat to an offer without any contingencies. A hard money bridge loan can provide these individuals the capital they need to purchase their new home instead of waiting for their previous home to sell. This type of loan acts as a bridge from one asset to another, is backed by collateral, and often funds in less than a week.

· If you have negative items on our credit report or are self-employed, making it sometimes difficult to prove your income, this type of loan can be easier to obtain than a traditional loan. These lenders are more concerned with the collateral or hard asset that you will be using to back your loan. They will also want to know your exit strategy, or how you plan on repaying them once the project is completed.

A Few More Facts about Hard Money Loans

Hard money loans are usually short-term loans, anywhere from 3 months to 5 years. Because these types of loans are often funded by private individuals, they do not have to adhere to the same restrictions and regulations that banks do, making these lenders more flexible and often easier to work with. The loan-to-value ratio varies widely among lenders and is usually somewhere in the range of 50 to 70 percent.

At Level 4 Funding, we work with hundreds of private hard money lenders who choose to invest in varied projects based on their interests.

Because of our rolodex of investors, we can often find the right investor for your project with the best rate possible. Call us today to discuss your needs and for a no-obligation quote.

Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com 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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Who Are Hard Money Lenders and What Do They Do?

A hard money lender is an individual or group of people that invest in various projects based on the collateral or hard asset. These lenders often specialize in a specific type of property and, as private investors, they are not bound by the same regulations that traditional banks face.

A hard money lender provides capital for various types of projects. These include residential, multifamily, businesses, warehouses, industrial, office space and even the growing-in-popularity multi-use projects. Many will not, however, lend on owner-occupied residential properties in part due to the Dodd-Frank Act. Because these investors tend to prefer specific projects, a lender will often develop a working relationship with one lender and turn to them repeatedly for their funding needs.

Hard money lenders tend to provide short-term loans, though these can often be extended for up to five years. They offer the perfect funding scenario for those in the fix and flip business that are looking for quick capital to jump on a promising property when it hits the market, instead of having to wait for a traditional loan to come through—a difference in not just days, but weeks. They can get into the project, complete the rehab, find buyers, and then pay back the loan that usually does not have an early prepayment penalty.

Hard money lenders are also fairly popular among developers. These types of lenders can provide loans with monthly draw programs, perfect for the construction industry. They offer interest only payments for a set period of time while the construction process is proceeding. They will want to see your plan, budget, permits and exit strategy. Not all projects go as planned, sometimes leaving developer’s credit reports with some marks against them. A hard money lender will not place as much emphasis on this aspect of lending as a traditional lender. For those that have some credit issues, they may be the best, and only, option available.

Hard Money Loans offer Quick Financing and Approval

A loan approval is possible the same day that you apply, whereas a traditional bank can take at least a week or more. From that point forward, the underwriting process if fairly straightforward. They will want to know your asset and will place more importance on this collateral than on your credit score or creditworthiness. Because of this, funding can occur in less than a week whereas your bank or credit union can take more than a month.

At Level 4 Funding, we work with a variety of private hard money investors that provide capital for all different types of projects. Our loan-to-value ratios are some of the highest in the industry and we pride ourselves on speed of service. Many investors turn to us when they are looking for capital in order to purchase a foreclosed, bank-owned or short-sale property and time is of the essence. Call us today for a no-obligation quote. Our approval process and funding can occur in as little as 24 hours!

Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com 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 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage