Loans for Real Estate Investing

Question & AnswerCategory: QuestionsLoans for Real Estate Investing
Steven asked 7 months ago

How To Get Loans For Real Estate Investing?

1 Answers
Vijay K Chopra answered 7 months ago


Undoubtedly, it can be said that dealing in real estate is an expensive affair. In such cases, one needs a bulk amount. But every time it is not possible for everyone to arrange that much amount. In such cases, the assistance of hard money lenders is unavoidable. Hard money lenders are mainly commercial lending organizations, those who solely deal with the real estate sector.

Usually, these loans for real estate investing are known as hard money loans, because these loans for real estate investing are available with stringent terms and conditions, higher interest rate as well as higher upfront fees (charged between 3 to 10 points). These loans are a sort of secured loans; here real estate plays the role of collateral. The loans, available for investing in real estate, come with the interest rate of 14%-18% and these loans are repayable within 6-12 months.

Besides, they may gather information like tax returns, bank statements and sometimes they may examine the property as well. Borrowers’ credit score, as well as their economic condition, are also taken into account.

Depending on the various factors, such as, involved risk, the type of deals, etc., the fees are charged. While availing loans for real estate investing, borrowers need to present their business plan too, as, lenders want to confirm whether the investment is risky or not. In such cases, the importance of borrowers’ income is unavoidable as well. A fixed and higher income enhances the possibility of availing loans for real estate investing.
Loans for real estate investing are available for all types of real estate investing.


To name a few, we can talk about these loans that can be used for purchasing homes, rebuilding homes, purchasing leases, etc. Unlike traditional bank loans, these loans are approved fast. At last investors are advised to check the prepayment penalties before opting for loans for real estate investing.


Buy when the market is bust, and sell when the market booms, this has always been the age-old philosophy in the market. As interest rates are at their historical low a large number of Americans, have now realized the importance of buying property as opposed to staying in rented accommodation. Every month as you pay your rent, that money is lost forever, but when you own your home, every payment that you make increases your equity in the property. Now that you’ve decided to invest, the next logical step is to look for finance. To help people finance their investment, banks offer loans or loans that are secured by real property. To be eligible to issue loans, the banks are required to establish a policy that determines the amount of loan that may be given, the need for paying off the loans, etc.

A loan can be obtained to buy, renovate and even refinance properties. Before you apply for a loan the first step is to get a pre-qualified certificate from the commercial mortgage broker. The broker is also the best person to help you navigate through the process and help you find the best rates for your real estate loan. You could also apply for these loans online, wherein the real estate lenders review your application and send the paperwork required for your home, which is to be signed before a notary. Once the paperwork is processed, you are ready to collect your loan amount.
But before you apply for a loan, it’s important to compare loan rates. The interest rates could vary vastly, thus thorough research before real estate investing can save you thousands of dollars. When looking online, it’s easy to get a general idea about the different quotes, thus allowing you to choose wisely. These quotes are generally dependent on various factors like the applicant’s employment history, the value of the property, etc.

Real Estate Loans can be defined under different categories, viz. home equity line of credit; that allows the equity in your home to secure credit, home improvement loans; that allow you to borrow to repair, renovate and improve your home, residential equity loans; that allow you to obtain loans against the equity that’s built in your current home, residential lot loans; that are issued for purchasing or even refinancing a residential lot that’s intended for the construction of your residence, and finally the recreational property loans, that allows you to purchase or refinance a recreational property that’s meant for personal use. Real estate investors can also go for commercial real estate loans. These loans offer low-interest rates when compared to other types of loans. However, the costs that are associated with borrowing under these types of loans could be high.