Commercial Mortgage Loan – What To Expect

 Hard money loans get their name based on the simple fact that they are loans backed by a hard asset, a property. Private lending has evolved into a mainstream business, and the biggest growing segment of finance for real estate, both residential and commercial. Professional real estate investors are comfortable with and helped daily by the availability of private money. A private commercial mortgage loan will normally be for a shorter term, and have greater interest. The benefit is it is available very quickly , so investors are able to finalizea deal and offer cash to the seller, frequently helping them to get property at a discounted price. Because these are short term loans, it is critical for the borrower to have a well thought-out exit strategy. The private lender expects the hard money to be repaid on schedule , and presenting them with a realistic payback plan is critical . Private lenders are usually successful business people themselves, and they like to work with other professional individuals. Documenting a successful track record will help the borrower secure the private commercial mortgage loan. We are in the throws of a global credit crunch, so a conventional commercial mortgage loan is increasingly hard to get, even for seasoned investors. Hard money loans are filling the gap, and provide faster access to cash for many investors, who know that fast money wins. Usually sellers are more open to discounting list price if the deal can be finalized immediately with cash. There is more opportunity for the investor to move ahead and purchase profitable properties if they can skip the long approval process so typical of the traditional commercial mortgage loan. With millions of dollars of potential profit at stake, hard money lending can be a huge benefit for investment situations Most hard money lenders are equity based, and focus less on the borrower’s credit and with more weight on the property and the amount of equity it provides . If the borrower has an income-producing building, a hard money lender is inclined to take a serious look at the opportunity, and you’re on your way to a private commercial mortgage loan.

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