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    The Real Reason Your Construction Loan Was Denied by a Major Lender

The Real Reason Your Construction Loan Was Denied by a Major Lender

If your bank will not approve your construction loan, you may feel as if it’s because of something you’ve done. In reality, however, you are most likely part of a growing trend. We’re going to crunch the numbers for you to identify why you are not alone, and what you can do about it.

As the reports from the FDIC show, bank-approved real estate loans in general have been on the decline for years. The third-quarter report for 2015 shows that real estate loans accounted for less than 3 percent of all bank activity – that’s not much, especially when considering construction loans accounted for over 7 percent of all bank activity in 2010, just 5 years prior.

Using the FDIC report generator, you can see for yourself that the banks made over $3 billion in profits from real estate loans in the third quarter of 2015 (the most recent report available). However, of the $3 billion, construction loans only accounted for $249,000. This number is very small to begin with, but it is down more than $100,000 from the same time 5 years ago.

Bottom line, this trend shows that construction loans are simply not making enough money for the banks to take them seriously. They are too risky of an investment for banks, and the real estate market is not strong enough to guarantee a profit for the banks if they were to seize a property. As a result, they often won’t touch these types of loans.

Instead, banks want to focus on the largest construction contracts possible so that they can minimize the risk and generate the most money at once. Fortunately, you can choose to work with a hard money lender instead of wasting […]

Investors and Developers: Could You Use Hard Money?

In some cases, investors and developers are better off taking out a hard money loan than using a traditional loan.

So when is a hard money loan better for developers and investors?

Typically, hard money is a better choice when an investor or developer:

Needs to close quickly and following traditional funding routes would take too long. Often, banks and other traditional lenders take several weeks – if not longer – to process the paperwork on a loan.
Has several good opportunities but not enough cash to accept them all. Banks won’t extend credit if it appears you’ll become over-extended.
Wants to take advantage of an opportunity without the financial strength banks require. While your credit scores and financial history are important with a hard money loan, they carry far more weight with a conventional loan – and that can make it difficult to obtain financing in many cases.
Has credit through a lender, but the credit isn’t sufficient for the investment.

Credit and Hard Money
Although credit is important when you’re interested in borrowing hard money, usually the collateral is more important than a borrower’s credit history. Because these types of loans, which can be for up to 65 percent of the collateral’s after-repair value, or ARV, are typically short-term and designed for investment purposes, they’re often the way to success for investors and developers.
Are You Looking for a Hard Money Loan in Atlanta?
If you’re interested in obtaining a hard money loan in Atlanta or its suburbs, we can help.

Call us at 404-814-1644 or get in touch with us online. We’ll be happy to answer your questions and walk you through the application process. You can also apply online today.

New Paces Funding Website

To start 2014 off, we’ve updated our website.  New content as well as the ability to apply for a hard money loan online.  If you need an Atlanta hard money loan or for other parts of the south, contact us today at (404) 814-1644 x101 or email Dean@PacesFunding.com.  We also do hard money loans on commercial properties.  Check us out at www.PacesFunding.com

Introducing Paces Funding

Paces Funding is Atlanta’s largest hard money lender. We are leading the way with innovative financing solutions for real estate investors. Our staff has processed over 1,000 loans over the past decade and is excited about the new opportunities we will be providing our clients. Over the next six months, Paces Funding will be introducing new real estate financing and investment opportunities.

Contact us today to get pre-approved for a hard money loan.