How To Choose The Right Bridge Loan Lender
Oct 05, 2016
Have you ever applied for a loan with a bridge lender and reached a point during the loan process where the “lender” seems to go dark on you? You quickly submitted all requested information to the hard money lender in a timely fashion and you were told the third party reports were received and appeared to be fine. No one has given you any indication that there could be an issue with your loan request. Yet, days are passing by without much communication. What can you do?
Contacting Your Commercial Bridge Loan Lender
You call your representative and ask why there seems to be a delay. In response, you are given a vague statement of reassurance, where your representative claims your loan application is still under review, that they will push the powers-that-be for an answer, and they close with making a promise of a decision being made soon. Your frustration starts to set in.
“To Be Fair, If Your Loan Request Is A Challenging One Or You Are Asking For Special Loan Considerations To Be Made, It May Take Longer [To Process]”
Did they find something in your application that wasn’t to their liking? Do they not want to give you a loan? Have they simply forgotten about you? What happens to the due diligence fee you provided to the lender? These are questions, which understandably start running through your mind.
Now, to be fair, if your loan request is a challenging one or you are asking for special loan considerations to be made, it may take longer for a lender to reconcile all your information and do a fair assessment of their level of risk as a lender.
When Your Bridge Lender Is A Broker
But what could also be happening is that your “lender” is actually acting as a mortgage broker. This is not a knock on mortgage brokers. They can play a very valuable role in helping source the right loan and programs for a borrower. However, what this means is your bridge lender may not have access to its own source of money to fund loans. They have to reach out to outside sources, such as an individual private investor, as a broker, in order to access the money that will ultimately be loaned to you.
Having to reaching out to a private investor source when monies are not readily available to a lender can create challenges that may slow or even all stop your ability to get a loan from them. A couple of these complications include:
- The private investor(s) may want a higher rate of return on their money than your “lender” anticipated. This creates a conundrum in who will absorb the difference. Do they pass the higher rate onto you, as a borrower, in order to protect their profit margin? Or do they stay committed to your loan proposal and accept a lower or no returns for themselves.
- The private investor(s) they work with may not have an appetite for your loan, at that time. Markets change and so does a private investors appetite for lending out their money. Third party private investors are not obligated to commit their money until final agreements are signed.
Suffice it to say, a bridge “lender” without its own source of money can leave a borrower in an unwanted situation, if they are unable to ultimately secure financing.
A borrower looking for a bridge loan should research the lender they choose to work with to vet their ability to fund out their loans when the time comes. Ideally a borrower should look to work with a bridge lender that has its own money source and has it available to use. The last thing a borrower would want is to go through the loan process, provide due diligence monies, and ultimately end up without a loan they were qualified to receive.
What To Consider When Choosing A Bridge Lender
- Ask the lender if it is their own funds or if they are acting as a broker for private money investors.
- Research the lender’s recent closings on property types and loans similar to yours.
- Ask the lender to give you a transparent breakdown of all costs/fees.
- Look at more than just the interest rates when deciding to go with a Bridge Lender.
- Consider your loan exist-strategy.
Riverdale Funding, LLC is a direct commercial hard money lender with its own source of money that is readily available to lend. At no time will Riverdale act as a broker to fund its borrowers loan request. Moreover, because Riverdale has its own source of funds, no loan committees or approval outside of Riverdale Funding is required to issue a loan.
Riverdale Funding is a true asset based commercial lender that does not take a borrower’s credit history into consideration nor requires a borrower’s personal financials. Getting a bridge loan has never been easier.
Consistency. Reliability. Satisfaction.
Contact Riverdale Funding today to apply for a bridge loan you can count on to meet your financing needs.