Long Term Loans: 12 Things to Consider When Choosing a Long-Term Loan
Purchasing a non-owner-occupied property as a long-term investment is an exciting and effective strategy for building your wealth. If you have bad credit or are trying to purchase a unique property that traditional lenders shy away from, it doesn’t mean that an investment property portfolio is out of reach for you. Hard money lenders and private money lenders offer cost-effective long-term loans for both people with bad credit and unconventional property types, allowing you to achieve your investment property dreams. But with so many lenders out there all offering different loan products, how do you know which one to choose? Here’s what to look for when deciding on a long-term investment loan.
- The property types the long-term non-owner-occupied loan covers. Not all loans accommodate different property types, so check what each lender offers before starting the application process. Some lenders, like us at RehabLend for example, offer long-term non-owner-occupied loans for a range of properties including single family homes, multi-family homes, townhouses, condos and planned unit developments.
- The acceptable market types a long-term investment property loan covers. Also keep in mind that not all long-term loans can be used for properties in different markets. Our non-owner-occupied long-term loans can be used in nationwide urban markets, suburban markets and rural markets.
- Whether the hard money lender provides long-term loans in your area. Not all lenders have the authority to lend in every state. You want to ensure that the lender you’re choosing is authorized to lend in your state to avoid any headaches down the line. At RehabLend, we can provide long-term loans nationwide, including buy-and-hold commercial rehab loans.
- What interest rates are on offer. While borrowing with a non-traditional lender such as a hard money lender or a private money lender generally attracts higher rates than traditional lenders due to the high-risk nature of the loan, this doesn’t mean you to need to settle for the first offer on the table. Shop around and see what’s on offer to make sure that you’re getting a rate that is both fair and competitive.
- Additional costs. In addition to repayments, long-term loans attract various costs including appraisal costs and closing fees. Compare what’s on offer and make sure what you’re being offered is reasonable. Also be sure to double check all the fine print for any hidden charges.
- How much you can borrow and for how long. Different hard money lenders and private lenders offer different loan amounts and lengths for long-term financing. We usually offer loans between $250,000 and $10,000,00 giving you a broad scope of opportunity. Generally, non-traditional lenders can offer long-term loans for up to thirty years.
- The down payment requirements. If you’re trying to secure a long-term loan, be prepared to need to pay a down payment of approximately 80%. At RehabLend, we offer a maximum LTV of 80% and a maximum LTC of 85%.
- The approvals process. When choosing a long-term lender, including private lenders for flipping houses, you also want to be sure the approvals process isn’t going to be overly complex or time consuming. Find a lender that helps reduce the stress of purchasing property with a straightforward, fast and easy approvals process.
- Credit score requirements. Traditional lenders often have strict credit score requirements which can make it difficult to secure a long-term loan if you have a not-so-great credit score. Choosing a non-traditional long-term lender could be a viable alternative that helps you secure the purchase of an investment property including rehab construction loans even for first time fix and flip investors.
- The complexity of the loan. Not all long-term loans are straightforward. If, for instance, you are purchasing a single family, non-owner-occupied investment property this would be a fairly easy loan to secure. However, financing for large condo buildings, especially if you are seeking a large-scale apartment rehab loan, will be more complex and therefore require more thorough case-by-case assessment.
- Whether renovations or rehab are required for the property you’re purchasing or refinancing. Keep in mind that if the property in question needs extensive rehabilitation, renovation or upgrades and improvements this may affect your options when it comes to financing. You may instead need to consider other options such as hard money fix and flip loans.
- How fast the loan can be approved. If an opportunity has come your way, chances are you’ll need to move quickly. Many hard money lenders can help you secure a long-term loan super quickly – even in a matter of days.
Ready to take the next step?
If you’re ready to explore your options further and would like to know more about the long-term loans on offer at RehabLend, click here or feel free to get in touch at any time. One of our friendly loan officers will be happy to help with any questions, explain the terms and conditions of our competitive long-term loans or get you started with our easy and straightforward loan approvals process.