Land loans
land loans deal with hard money and their classification is solely based up on the purpose of loan. The purpose may be regarding construction, commercial, land acquisition, bridge, residential, and development and the term Âhard money can be defined as the complexity faced in obtaining land loans .
Land is needed for development of any real estate or construction but majority of conventional lenders like banks, loan association, savings, pension funds, etc. do not take interest in sanctioning such loans. Hence, developers approach specialists who would be able to locate investors making such land loans feasible. Hard money land loan lenders fall in this category. They offer loans for a lesser percentage. In addition to this, the loan terms offered by them are worse than those offered by conservative lenders. Majority of hard money land loan owners have raw land loans placed with privatized money sources. Here the loan decisions are made based on asset value instead of credentials of borrowers. This causes ease in getting these loans. However, service takes a back seat.
Deals related to raw land acquisition are generally time sensitive. Hence, hard money land loan lenders are accustomed to making quick underwriting decisions. The eligibility of borrowers is checked fast and after ensuring the availability of capital required, decisions are given within 1 or 2 business days. Borrowers approaching lenders dealing with hard money land loan should strictly abide by the guidelines laid by lenders. Some of the lenders might not finance the purchase of properties weighed down by judgments of clients. Borrowers usually make use of brokers for navigating through the restrictions for finding the best lender dealing with hard money land loans . Such lenders are in great demand. However, there is a greater risk involved, placing of collateral can nullify it.
The land loans requires an average time of four weeks to close. One can get a different answer, based on numerous factors. Some of them include pre-approval process, title work, appraisal time, continuous communication between lender of land loans and borrower, etc.
Pre-approval process
This process does not have any prescribed format. It differs from lender to lender. The land loans have a unique nature and hence need extra information from the borrowers side than a conservative loan. This time can range from 1 day to several days. The speed of the process can be increased if the borrower gives all the information right away to lender. After this, the eligibility of borrower is checked. The time required for pre-approval is directly proportional to the clarification of borrower.
Appraisal time
This time is beyond the control of loan lenders. The land appraisal must be in a very detailed manner, so that the most precise value of land can be established. This time varies due to the factors like size of land bought, location, market volume, kind of use, and accessibility of all appraisers. This period normally ranges between 2 and 4 weeks. It may be extended up to 8 weeks as well.
Title work
This thing generally requires a week. Title commitment is the first and the foremost thing is needed here.
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