FAQ
Construction Loan Programs
What is a construction loan?
A construction loan is an interest only real estate loan that is secured by the projected market value of the developed residential property. The market value of the land (if owned by the Borrower) is used as equity. Such a loan can cover up to 90 % of the soft and hard costs of the construction works of a venture. Proceeds are distributed via scheduled installments after inspections of the construction site are conducted by the Lender and the loan balance needs to be paid in full by/on its maturity date.
What is the term/interest rate of a construction loan?
The term of a construction loan is generally 12 months with a possible 4 months extension (upon request). The interest rate is 4.99%, increasing with 0.5 % monthly; the interest rate cap is set at 8.99%. No prepayment penalty is applicable.
What is the minimum FICO to pre-qualify for a construction loan?
Lenders are sensitive about the credit report of the Borrower. The minimum FICO required is 680.
What are the fees affiliated with obtaining a construction loan?
The loan origination fees are between 2 and 3 points depending on the loan amount. Some of the additional third party charges to be considered are credit report fees, appraisal report, loan documents, others.
What states does the construction loan program cover?
Our construction loans are available in 42 states nationwide. States where the program is not currently offered are: California, North Dakota, Michigan, Mississippi, West Virginia, Vermont, Rhode Island and Alaska.
Commercial Loan Programs
What is a commercial loan and what class properties qualify?
Commercial loan is the type of real estate loan secured by a commercial property such as apartment complex, office building or retail center.
What are the terms/ interest rate of a commercial lending?
The interest rate varies between 5.25% and 9.25%. It highly depends on the chosen loan term and the credit score of the Borrower. The term is generally 10 years and the minimum FICO required is 650.
Do I need an appraisal to prove the market value of the subject property?
Yes, appraisal is required so a commercial loan can be approved and processed further. The appraised value will assist underwriting determine the final loan amount. Lenders have a list of approved companies they exclusively work with; therefore, it is recommended to wait for written instructions prior to arranging an appraisal.
What documents do you need to apply for a commercial loan?
To receive a pre-approval the following documents are requested:
– Completed 1003 form;
– Purchase agreement (if applicable);
– Preliminary title report for the subject property;
– Mortgage statements (if applicable);
– Borrower’s credit report.
If the loan application is pre- approved, submission package will need to include additional paperwork. For instance:
– Two years of company’s operating statements for existing entities;
– Rent roll, commercial leases, occupancy certification;
– 3 months bank statements;
– Appraisal;
– Others.
What is the estimated turnaround time for an application?
Commercial loan are usually funded in 30 to 45 business days.
Fix-and-Flip Loan Programs
What is a Fix-and-Flip loan?
Fix and Flip loan programs are developed to provide access to capital for both: purchasing a listed property and the rehabilitation of the building. To begin with: to obtain a loan for the purchase of a discounted real estate asset, a Borrower must have at least 30% down payment to prove enough involvement in the venture. The lending is secured by the value of the subject property and its estimated After Repair Value is amongst the main criterions to determine the approved loan amount.
What are the terms/interest rate/fees of a Fix-and-Flip loan program?
The term is 12 months (one year), however, in certain circumstances; if needed the maturity of a Fix-and-Flip borrowing can be extended with additional 6 months. Current interest rate is between 8% and 10 % and the origination fees charged by Brokers are between 1 and 3 points. Fix- and-Flip loan program is a short- term lending thus usually there is no prepayment penalty applicable.
What is the minimum FICO?
Generally, the minimum credit score required for an approval is 650. Borrowers with excellent credit history also prefer using private lending financial solutions as they offer the benefit of: quick turnaround time of their loan application and a simplified underwriting process. The convenience of serving just one loan to cover all of the real estate venture’s costs can further reduce the overall expenses of the project.
Do I need to have experience “flipping properties” to be approved
Everyone deserves the chance and so our Fix-and-Flip program qualifies beginner entrepreneurs for an approval. Institutional lenders review the prior experience of the applicant while private lenders consider the value of the subject property and the exit strategy of the applicant.
How do I apply for a “Fix-and-Flip” loan?
The procedure of applying for a Fix-and- Flip is very simple. A completed loan application 1003 can pre-qualify an inquiry in 24 hours. Some of the documents requested after are: purchase agreement, all Borrowers ID, constriction bid (if applicable), Documents of Incorporation if application is under LLC, others. No tax returns or financial statements are requested.
Hard Money Loans
What is Hard Money Loan?
Hard Money loans are exclusively designed to fit the needs of Borrowers that may experience challenges with obtaining a business lending from banks. The loan is secured by the value of a real estate asset. Hard money loans can be used to purchase a listed property and so they are also the perfect solution for entrepreneurs that need to close a deal quickly;
What is the minimum FICO to qualify for Hard Money Loan?
Private lenders are interested in the value of the property, not the credit score of the Borrower. FICO of 620 is considered the minimum, yet each case is reviewed individually;
What are the terms and the interest rate of Hard Money Loans?
The term can be anywhere from 12 months to 36 months. The interest rate can vary depending on the term chosen and the Loan-to-Value ratio. Current rates are 8% to 11% interest only;
Do I need to provide copies of filled tax returns?
Hard Money underwriting process is simplified. You do not need tax returns or financial statements;
What is the closing time of an approved application?
Generally, a loan can be funded in 7-10 business days. Private lenders understand the importance of quick funding and rarely request an appraisal of the subject property which significantly reduces the processing time.
