Even though all lenders are not created equal, they still have some things in common. Learning the basis regulations surrounding lenders is important. This way the applicant isn’t shocked when going to process an application. Learning a little about the lender themselves or the institution is also helpful. Having some type of clue as to what to expect can reduce anxiety and stress.
Business Strategies and Lenders
One of the most obvious differences between traditional mortgage lenders and private lenders is the amount of time it takes to process the application. If a real estate owner has a business deal to renovate a particular property, in a hurry, it may not be wise to go to a traditional lender.
A traditional lender will definitely cause the real estate agent to miss his/her business deadline. It typically takes 2 to 3 months to process an application. Since it is a banking institution, there are many guidelines to follow. The paperwork has to be signed by various people with different stages of authority.
In some cases an agent may simply be waiting for various forms to be signed. Because of this long process a real estate agent may seek a private lender. Private lenders make decisions a bit quicker.
They are also able to process the paperwork faster. They still have to abide by federal and state regulations. However, these are less than traditional banks, since the lender is using his/her money.
The real estate agent can expect the application request and approval to be completed within 2 weeks. This faster pace is much more convenient for the real estate agent. Now he/she does not have to compromise and miss out on important business deals. Dealing with lenders have to work well with the time schedule of the property owner, otherwise they could lose money.
The property owners when seeking a lender should reduce unwanted expenses when attempting to purchase more than one location. Some owners find themselves coming up short of funds when they own multiple properties. Taxes and fees have to be on these properties. While the property is waiting to be sold, the real estate could be behind certain payments.
By reducing property expenses and saving money wherever feasible, the owner is better equipped when it comes to excess charges. Hard cash lenders request down payments from its clients in most cases. However, with El Paso hard money lenders they try to work with the applicant, concerning down payments. The amount of the down payment could be as much as 30% of the total amount of the loan.
Thirty percent of a down payment can be expensive for a property owner that owns multiple properties. By cutting cost wherever possible on current properties, the owner will have a better grip on new expenses. Down payments are not the only expenses that may be required during a loan request. There are also fees charged during the underwriting process. The origination fee is one fee, among others.
Another very important topic that will come up during the loan process is the credit of the property owner. Yes, the credit is looked at, but will not determine approval. This is a good thing for real estate agents with low credit.
However, property owners should take the time to increase their credit score. As a business owner it makes doing business from day to day, easier. El Paso hard money lenders understand that things happen and everyone can not have good credit.
Hard cash lenders may request a higher down payment if the property owner’s credit is low. And an even higher down payment if there are bankruptcies or foreclosures. It would be good business practice and also a good business strategy for the property owner to be attentive to their financial history. Keep an eye on ways to heighten the credit score and reduce foreclosures.