5 Crucial Mistakes You Should Avoid When Applying for Commercial Bridge Loan

by

Commercial bridge loans serve as a great means to acquire adequate funding for urgent requirements. Real estate investor gets relieved when his loan gets approved, and there are no hurdles faced during the financing process.

The bridge loan is a means to take benefit from the available opportunity. One can look for commercial real estate lenders to get great deals. No doubt commercial real estate loans are a great means to fulfill the obligation.

Still, people simply seeing the benefits opt for a bridge loan with no proper understanding or idea—this where one can get into trouble.

If you are willing to take a commercial real estate bridge loan, then here are the five common mistakes you must avoid to set yourself on the path of success.

1. Not providing correct or complete information

When applying for a commercial real estate bridge loan, the lender will ask for numerous details, including details about your finance and personal life. Depending upon the need and purpose of the loan, you will have to submit some documentation to help the lender get a clear picture of your finances.

For example, you can expect to show at least two or more years of tax returns. While for the business owner, the lenders can even ask to present a profit and loss statement. This will help the lender make the final decision as he will better understand the financial standing.

Profit and loss statements and tax returns are the first steps to get the loan approved. The borrowers, however, tend to make mistakes. They avoid asking about the documentation required and provide the lender with improper or half information. Ask the lender for the list of documentation he will need.

Getting the list in advance will give you time to gather all the essential documentation. Besides this, you can create a summary letter indicating the purpose and goal of your loan. This will help show your intent to the lender and the reason for your choice for a bridge loan.

2. Not choosing a reputable lender

Another great mistake the borrower makes is taking help from the first lender they find along the way. It would help if you researched well to find a lender who is trustworthy, reliable, and thinks in your best interest.

Thus, it is vital to gather some information before you decide to take help from a lender. You must consider researching the experience of the lender in the particular niche. Further, please enquire about the information they will need to process your application.

Do not hesitate to inquire about the questions you have in your mind. Be it about the approval process or repayment, clear all your doubts in advance. A suitable lender will always respond to the questions timely and keep you updated about the application process.

Also, they will offer you their contact information. You can consider scrolling through the lender’s website to find adequate information and see if they are reliable.

Going through the reviews section will offer you the right insights about the lender. However, it will be better to consider the other options if you find anything suspicious or doubtful.

3. Simply focusing on the interest

No doubt, having a clear understanding of the interest is highly beneficial. But the borrower needs to find the actual cost of the bridge loan by including all the additional fees charged to him.

There is a chance a higher interest rate may be quoted. However, with limited prepayment and expedited due diligence reports, one can make up for the initial cost. It would be best if you remembered no two bridge lenders are the same.

Thus, the borrower should ask good questions to the lender and research to find someone who can offer them the best. Simply focusing on the details of the interest won’t help you much until you check each point of the deal well. It would be best to stay aware of the pointers and other essential details mentioned in the contract.

Although most sources are direct capital, it will be better to verify the fund sources and recently closed deals with the brokers and borrowers. This will help get a clear understanding.

4. Not planning the budget in advance

New borrowers tend to make some mistake of not planning the budget. This is vital because the borrower is expected to pay the remaining balance once drawn on the loan. It is crucial to understand the more money you will take, the higher your payment will be.

 Therefore, you must take necessary measures like planning for the budget in advance to avoid such mistakes. This will help stay in control and prevent lending huge loan amounts.

When you are incapable of making the payment, they will seize the property. To stay clear of such a situation, you must prepare a clear budget that will keep you under the limit. This will help manage the payments quickly, and you will have adequate resources to manage tough times.

5. Not having enough funds for the down payment

A traditional mortgage requires the borrower to have 5 to 20% of the down payment. However, in the case of a bridge loan, it is a bit more. When you don’t have an adequate down payment in your bank account, they can deny the loan.

Therefore, it will be beneficial to ask the lender if they offer bridge loans with no money. Or else you can find someone who can provide you with a low percentage for a down payment.

However, the better your down payment will be, the easier it will be to get the loan approved. Thus, it will be beneficial to get the down payment amount in writing before moving ahead with the application process. This will guarantee you do not face any hurdles. Also, keep some amount in reserve for other additional expenses.

Conclusion

Getting a commercial real estate bridge loan is a commitment and an important step to achieve your goal. Thus, please avoid the above-listed mistakes so that you move ahead smoothly in the direction of your dreams. Further, it will be helpful if you consider taking help from a professional.

A professional will guarantee you get adequate support and assistance with your real estate investment. They have the right skills to bring forward the best deals and guide you about the possible options you can choose for your real estate investments.

Also, with a professional by your side, there will be less chance of making a mistake which can affect the application process.

If you wish to take help from a professional, then Private Capital Investors is a reputed company who can offer you support and assistance. They have a team of expert professionals who will guide you about real estate investments and available deals to guarantee you get the best.

Besides this, they can also help you secure a good loan for your requirement. With their help, you won’t face any trouble with the investments. Moreover, they assure to offer their clients timely assistance to guarantee 100% satisfactory results. So do not hesitate to contact the company for help.

Want to learn more? Get in touch with us today.

Similar Blog

What is BRRRR? Is this Framework Right for You?

What is BRRRR? Is this Framework Right for You?

Real estate investment has become quite broad. As a result, there are different strategies that people can make use of to improve their earning resources and reduce the risk associated with the process. The strategy works well for experienced and fresher investors to...

Is Commercial Line of Credit Right for Your CRE Projects?

Is Commercial Line of Credit Right for Your CRE Projects?

Real estate investment requires a considerable amount of funding. However, in most cases, the investors lack funds in hand. Thus they look for financing options that will help them to ease the experience and make the investment. One such strategy is a line of credit....

How Your Rental Property can Make Money?

How Your Rental Property can Make Money?

The rental property investment is attractive as it assures a fixed income for years. The rental property investors in the US enjoy the benefit of 30 year fixed mortgage rate. This type of mortgage is very much an outliner compared to the country's other options. Most...

Want to learn more? Get in touch with us today.

Our experienced team is ready to assist with your financing needs.

Address:
2101 Cedar Springs Road Suite 1050 Dallas, TX 75201

Phone:
(972) 865-6205

Email:
info@privatecapitalinvestors.com