Interested in real estate investing? Learn a few things about this new type of loan product.
By Michael Mikhail on November 8, 2021
Low rate money lending is a new form of borrowing that exists somewhere between hard money lending and a traditional mortgage. As a new type of loan program, it is perfect for new investors to the real estate market.
A low rate cash loan program is defined as a long term (5/1 ARM, 7/1 ARM, 30 year fixed) real estate investment loan program that closes faster (2-3 weeks). ) than a conventional loan.
When it comes to hard money loans, one of the main differences with soft money loans is that they require more underwriting, which allows it to have lower rates and greater security. It is based on both the borrower’s credit rating and the property’s loan-to-value (LTV) ratio and is generally a term loan rather than a bridge loan.
What are the advantages of low rate cash loans?
As a new type of loan program, Low Rate Loans are ideal for novice or seasoned investors looking for options that offer long term financing. It can be applied to commercial, multi-family or investment properties as long as the lending strategy reflects the need for long-term financing.
Depending on the lender, a potential borrower can get a loan with an interest rate as low as 4.375% and an LTV of up to 85%, compared to 70% with conventional financing, without PMI. These types of benefits make it easier for investors because they lower the barrier to entry a bit further.
Some of the benefits of low rate cash loans include lower rates, higher LTVs, and longer loan terms. Depending on your lender, you can get financing for up to 5/1 ARM, 7/1 ARM, or 30 years fixed. This is a more lenient format than hard money lending, which typically consists of short-term financing bridging loans with higher rates, lower LTVs, and higher costs.
Additionally, low rate cash loans require more subscription so the application process is not as straightforward as with hard cash loans. Since low rate loans offer more money at lower rates and longer financing terms, one of the main additional criteria for low rate loan applications is that you must have a good credit rating of credit (at least 650).
Due to the exclusivity of this type of loan program, many lenders do not offer this type of loan product.
When looking for a low rate money loan for your real estate investment, it is important to find a nationally reputable private money lender who specializes in low rate money lending.
About the Author
Michael Mikhail is the CEO of Stratton Equities, one of the national leaders in private credit. He has 20 years of experience in the real estate industry and operates his business in New Jersey.
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