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New Jersey Hard Money Loans
There are so many different types of loans and financial products out there that it can sometimes be hard for average consumers to keep up with all of them. You might not have heard of hard money loans, but for some people — such as real estate investors — they can be ideal. If you’re someone who is interested in buying a piece of real estate but if you’re having trouble getting approved for a traditional mortgage to buy that piece of land or that home, it might be time for you to start looking into hard money loans.
What are Hard Money Loans?
Hard money loans are loans that require you to use some form of collateral to secure the loan. Generally, this means that a home or property will be used, since this is a popular loan in the real estate investing industry. These loans are generally considered to be higher-risk loans for the lender and are often granted by private companies or investors rather than the big banks that typically grant mortgages.
What Can You Use a Hard Money Loan For?
In general, hard money loans are used to pay for real estate. For example, even though you might not have heard of it, it’s a tool that many real estate investors have been using for years. A lot of the people who purchase a lot of real estate for investment purposes would not be able to do so without the help of hard money loans.
Signs You Could Be a Good Candidate for a Hard Money Loan
Hard money lenders often look at credit score and income when deciding whether or not to grant a loan, but they often aren’t as strict as typical mortgage lenders. Therefore, if you don’t have the best credit, it might be a good loan option for you to look into.
If you’re planning on buying a piece of property so that you can flip it and sell it, then a hard money loan might work well for you. In fact, many people who use the services of hard money lenders are real estate investors, not people who are purchasing homes for them and their families to live in.
Another reason why some people turn to hard money loans is because they are hoping to purchase a property that might not be in the best shape. Many mortgage lenders require homes to pass home inspections before they will grant loans. If a house that you want to buy is in bad shape, then you could be hoping to get help with buying it so that you can fix it up. Hard money loans are often used for this and can help you achieve your dream of purchasing a fixer-upper for a great price.
What are the Cons of a Hard Money Loan?
Of course, as with any other financial product or just about anything else that you can think of, there are some downsides that you should know about. However, if you are the right candidate for a hard money loan, you will probably find that the advantages greatly outweigh the disadvantages. For example, you should be aware that these loans usually come with short loan terms; this means that you won’t have a lot of time to pay the loan off. As long as you know this when you get the loan, however, it should not be too much of a problem. You will also want to keep an eye on interest rates when taking out one of these loans, but this is key with any type of loan that you might take out.
Even though hard money loans aren’t for everyone, they can be a great borrowing tool for individuals in certain situations. Now that you have learned a little more about these loans, you might have decided that a hard money loan might be right for you. If this is the case, then contact a Raleigh hard money lender so that you can apply for and receive your funds. This might just help you make your dream of owning a fixer-upper or investing in real estate finally come true, all without the help of a traditional mortgage lender.
New Jersey New Construction Loans
There are various reasons that business owners may want to expand. For instance, there are some business owners who no longer want to pay rent, so they want to construct a new building of their own. There are also business owners who need to expand but want to do so in the form of renovations.
Regardless of why business owners want to expand, commercial construction projects can be extremely costly. It may take thousands to millions of dollars to renovate or construct a building, and many growing businesses do not have the funds to cover renovation and construction projects out of pocket. This is where a commercial construction loan in New Jersey can be useful.
What is a New Jersey Construction Loan?
A commercial construction loan lets business owners use funds to complete construction or renovation projects. Business owners can use these funds to pay for materials, labor, and other expenses.
A commercial mortgage is made for business owners who want to buy existing commercial property, but a commercial construction loan is for business owners who want to renovate existing office buildings or construct a new building.
They are not like other loans. For instance, most traditional loans will issue the full loan amount to the borrower in one sum. When the borrower has been issued the loan, he or she is then responsible for paying the loan amount back to the lender. Most traditional loans require that borrowers make monthly payments over a fixed period of time.
Business owners who get commercial construction loans will not be issued the full payment at once. Commercial construction loans are made to disburse the funds over the course of the construction or renovation project. Borrowers will meet with their lender to agree upon a draw schedule. A draw schedule releases the funds after certain project milestones are completed. Many lenders will send an inspector to the site to ensure that the work was completed before the funds are released. The first draw may be when the land was cleared, and the second draw may be when the foundation of the building was poured.
With a commercial construction loan, the borrower is only responsible for paying interest of the amount that has been disbursed. For example, if a business owner takes out a construction loan for $250,000, but only $100,000 of the loan has been issued to the borrower, then he or she will only have to pay interest for $100,000. When the project has been completed, the borrower can pay the remaining principle with one payment. However, business owners can also take out a commercial mortgage if he or she doesn’t want to pay the entire principle at once.
What About Interest Rates?
With most construction loans for commercial properties, business owners should expect to have an interest rate that is between 4% to 12%. If borrowers have high credit scores, they will have lower interest rates.
Typical Eligibility Requirements for a New Jersey Commercial Construction Loan
There are many factors that can determine eligibility for a New Jersey commercial construction loan. While credit requirements will vary based on the lender, it is ideal to have a credit score in the high 600s if you are applying for a commercial construction loan. Another factor that will determine eligibility is your debt-to-income ratio.
When you are applying for a commercial construction loan, most lenders will want to see a plan that outlines each step of the construction or renovation project. Lenders will also want to see cost estimates for materials, labor, and other expenses.[flexy_breadcrumb]