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Why does the Commercial Hard Money Loan Application Process Feel Like a Strip Search


paperfree Aditi Bansal 29:14
Published on Thursday, May 25, 2017

Have you ever felt like you have been strip searched after just applying for a commercial hard money loan? In today’s real estate market, most commercial hard money lenders require too much personal information that you may feel like they know every detail about you before they are done.

tags  #Hard money loan  #Loan Application Process #Real estate Industry

 

Although comparing your loan application procedure to strip searching is a bit extreme, handling details of your work history, investment history, credit history, and other lending criteria to get approved for a commercial hard money loan can feel intrusive. Have you ever wondered what happened that today we cannot walk the real estate investing world without such intensive profiling? This can only be because of the several changes that have occurred over the last few years in the commercial hard money lending industry.

Initially, the commercial hard money lenders could lend to anyone based on the potential profits after investing in a property. The lender had little and sometimes no emphasis on other personal lending criteria. At that time, having a good credit, large income, or investing experience didn’t matter. However, these were the glory days of the industry. The housing markets were always hot everywhere, and commercial hard money lending worked efficiently to provide fast money for investors in the real estate industry and without putting them over the coals.

The trouble started after the housing market crashed from the year 2008 to 2009. Most commercial hard money lenders lost their money during the crash and forced them to tighten their lending criteria. Traditional lenders also toughened their lending requirements, and this explains why most commercial hard money lenders today have almost similar requirements to traditional lenders.

In today’s real estate industry, commercial hard money lenders require similar requirements that traditional lenders initially required before the 2008 to 2009 real estate crash. This included;

  • A complete job history
  • Your current job
  • A full credit history
  • Real estate investment experience
  • A 20% down payment
  • Other expenses including repair, title, and closing costs

The main advantage of commercial hard money lenders is they can loan you to make repairs and traditional lenders won’t. The worst thing about the change is the experience requirement. Most first-time real estate investors face the main challenge of getting the needed funds to close the first deal and most of the time commercial hard money lenders muscle the new investors out of the game even before they get started.



This page with a focus on Hard money loan, Loan Application Process was shared by Aditi Bansal.

 
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