If you have located the perfect commercial property for your business but have not researched commercial loans Texas yet, then you will need a fast alternative to get funding. A hard money loan could be just what you need until you can secure conventional funding.
A hard money loan is simply a loan that is short term and the lender is an individual or private investor instead of a bank or other main stream lender. The loan is secured with the property that you are buying so that the lender has a means of recovering their investment if you default on the payment. The term of the loan is normally twelve months but it can be as long as 2 to 5 years. The borrower makes monthly payments on the loan which are normally all interest or interest and only a small amount of principal. At the end of the loan term there is a balloon payment that the lender must pay.
There are many reasons that hard money commercial loans Texas are popular with borrowers. The first is the fact that the biggest qualification for the loan is the value of the property. The lender is not looking at the borrower’s credit history, the financial condition of the business or even the industry that the company is involved in. The main criteria for getting the loan is that the property being used as collateral is worth more than the amount of the loan. In addition, the lender is not going to deny a loan due to a recent bankruptcy or other financial issue.
Another advantage of a hard money loan is the time that it takes to process. In many cases standard commercial loans Texas can take 60 to 90 days to complete the application process. But you can make a request from a hard money lender and normally have an answer in a few hours or a few days. This fast turnaround time can be very helpful if you have found a great deal on a property and need to act fast to make the deal. You will then have a year or more to complete your research and prepare to begin the application process for commercial loans Texas.
What Hard Money Can Be Used For
In general, hard money loans are much more flexible than conventional loans. The only caveat is that the property have a value greater than the loan amount that you are asking for. The lender is making a better interest rate on the hard money loan but they do want to be sure that the collateral property will hold its value. In many cases, you will need to make a decent down payment to create instant equity. This assures the lender that the property will always be worth more than you owe and foreclosing would allow them to recover their investment.
What a Hard Money Loan Will Cost You
You are going to be paying a slightly higher interest rate and you will also be paying points. But the exact rates will be determined by the lenders. If you are in an area of the country which has a large number of investors offering hard money loans then the rates should be very competitive. But in areas with few investors the rates could be higher. As with any potential loan, you will want to ask for a full fee schedule and list of any other charges that you might need to pay before you sign the loan agreement.
Dennis Dahlberg
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.
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