Real Estate Loans
A Flexible Financing Solution
Real estate loans are a common financing tool that allow businesses or individuals to leverage real estate as collateral in order to secure funding. This type of loan is popular for businesses or property owners looking to purchase, refinance, or develop real estate. Unlike unsecured loans, real estate loans are secured by the property itself, which reduces the lender’s risk and can often result in more favorable terms for borrowers.
What Are Real Estate Loans?
A real estate loan is a type of loan that is secured by the value of a piece of real estate. The loan is typically used to purchase or refinance residential, commercial, or industrial property. The collateral for this loan is the property itself, and if the borrower defaults, the lender has the right to seize the property through foreclosure.
There are various types of real estate loans depending on the purpose of the loan:
Mortgage Loans: Typically used to purchase residential properties.
Commercial Real Estate Loans: Used for purchasing or refinancing commercial properties like office buildings, shopping centers, or industrial complexes.
Bridge Loans: Short-term loans used to bridge the gap when purchasing new property before the old one is sold.
Hard Money Loans: A form of short-term loan with higher interest rates that is typically used for high-risk projects or distressed properties.
- Rates: Starting at 4%
- Funding Amount: $50K – $50M
- Funding Term: 6 Months – 30 Years
- Speed: 2 – 8 Weeks
How Do Real Estate Loans Work?
The amount you can borrow with a real estate loan is determined by the appraised value of the property and the loan-to-value (LTV) ratio. The LTV ratio is a key factor in determining how much you can borrow and is calculated by dividing the loan amount by the value of the property.
Loan-to-Value Ratio (LTV): The LTV ratio determines the risk level of the loan for the lender. A lower LTV ratio means a smaller loan relative to the value of the property, which generally results in better terms and lower rates. Common LTV ratios for real estate loans range from 60% to 80%, depending on the type of property and loan.
What Are the Benefits of Real Estate Loans?
- Lower Interest Rates: Because the loan is secured by property, lenders generally offer lower interest rates compared to unsecured loans.
- Higher Loan Amounts: Real estate loans can provide larger funding amounts, depending on the value of the property used as collateral.
- Flexible Terms: Real estate loans often come with flexible terms, allowing borrowers to adjust the repayment schedule based on their financial situation.
- Longer Repayment Periods: Many real estate loans have longer repayment terms, making monthly payments more manageable for borrowers.
What Are the Downsides of Real Estate Loans?
Risk of Foreclosure: The primary downside is the risk of losing your property if you are unable to repay the loan.
Longer Approval Process: Real estate loans, especially for commercial properties, often require a longer approval process compared to other types of loans. The lender will need to appraise theproperty and assess various factors like market conditions.
High Closing Costs: Real estate loans can come with higher closing costs, including appraisal fees, title insurance, and legal fees.
Who Qualifies for Real Estate Loans?
Real estate loan approval depends on several factors, including:
- Credit Score: Typically, a credit score of 620 or higher is required for most real estate loans. However, for more competitive rates, a higher credit score (700+) is ideal.
- Property Value: The loan amount is determined by the value of the property. The higher the property value, the more you may be able to borrow.
- Income and Debt-to-Income Ratio: Lenders will look at your income to ensure that you can comfortably afford the loan payments. A debt-to-income ratio of 43% or lower is typically required.
- Time in Business (For Commercial Loans): Lenders may require that a business has been in operation for at least 2 years for commercial real estate loans.
How To Apply
Our application process is fast and easy, taking just a few minutes to complete, and funds can appear in your bank account in as few as 1-2 business days from approval. Here is how to apply:
Before you apply, make sure that the funding program is the right solution for your business's needs.
Consider whether you will be able to use the funds for your desired purpose, and if the repayment structure is conducive to your cash flow. Take your time to determine the amount of funding your business will most benefit from.
Here is what you will need to submit with your application:
- A valid driver's license
- 1 voided business check
- Last 4 months of bank statements
- Last 4 months of credit card processing statements
To start the application process, give us a call or fill out our short online application.
We will ask you to provide some basic information, along with your desired funding amount.
Once you apply, a representative will reach out to you, so make sure you have all your documents ready from 'Step 2'. The representative will explain the repayment structure, rates, and terms you qualify for. This will ensure that there are no surprises or hidden fees during repayment. Once you decide, you will be given a final application to submit along with your documents.
If you've been approved, you'll hear back from us within 24 hours. Funds should then appear in your bank account in 1–2 business days.
What If I'm Declined?
Your application may be declined if your business’s cash flow is insufficient at the time of your application. This product places an emphasis on monthly revenue, so applicants with strong sales in the previous 4 months are more likely to receive approval than those without. You may also be asked to provide statements going back farther, even from a previous year.
In some cases, we may conclude that taking on more debt would do more harm than good for your business. In this case, we might recommend a different, more affordable business financing tool. At Signet Capital Group, we can help you explore your options and point you in the direction of the most sensible choices.
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Expert loan officers, always available to guide you through the process and answer your questions.
Approved in Under 1 Hour
Fast decisions on custom packages tailored specifically to your business's unique cash flow needs.
Same-Day Funding
Once approved, funds are wired immediately to your account so you can get back to business.
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