5 Simple Steps to Close a Bridge Loan Fast in 2014
Do you have a commercial loan coming due sometime in 2014? Or are you looking for new investment purchases this year? Well, if you haven’t already started looking for various sources of financing I would say, make haste! The clock is ticking. Financing is always the hardest piece of the puzzle for any investment property purchase. And with a tidal wave of CMBS loans maturing this year and next year, those in need of a commercial refinance need to start looking now.
As best told in a recent article I highlighted on NREIOnline.com called, ‘How to Get Screwed When Buying Real Estate,’ financing is always the hardest part. And banks aren’t getting less picky about the loans they fund, but are getting more picky. New regulatory compliance and stress testing are tightening the purse strings at the big and small banks alike. For those with new investment property purchases this year, or for those with a maturity date fast approaching on a current loan, now’s surely the time to start considering all forms of financing.
Most real estate investors are not well versed in the various forms of financing available for investment properties, outside of traditional bank financing. Bridge loan lenders, also called commercial hard money lenders, are another form of financing for investment property purchases. These private money loans are non-bank loans, which means they are financed by non-bank sources of financing.
The typical timeframe for a private money lender to fund a loan is between 1 day to 30 days. Each bridge loan lender has unique requirements for approving a loan, but there are a few basic items that will help you close a bridge loan quickly, and of course it will be light speed ahead of any bank loan:
- Use a Dedicated Private Money Broker – A dedicated private money broker, who works with a variety of bridge lenders, is always your best shot at getting your financing closed quickly. In most cases, you won’t get a better deal if you go directly to the private lender yourself anyway. Use a good hard money broker, not your average mortgage broker. A good private money broker is worth their weight in gold.
- Get a preliminary title report pulled and have it ready. You can use a title company that you’ve worked with in the past to save time and money.
- Provide a purchase contract to the lender if it’s a purchase – If it’s a refinance loan, get a payoff statement from the current lender.
- Buying a property as an LLC or Corporation? Get all of your business entity documents together including your Articles of Incorporation, Operating agreement, etc. Some lenders will require more business-related documents, so check with your particular lender.
- Get Proof of Insurance – Get with your insurance agent and be ready to provide proof of insurance. The lender will want to be listed as the “interested insured” on the policy so find out what name should be listed on the policy.
Banks will continue to be picky about what loans they do this year and next year. Be prepared with multiple alternatives for financing in 2014. Don’t catch yourself in a last minute situation with no alternatives. A bridge loan is a no-hassle, low documentation loan, that may replace your next bank loan.