The traditional bank loan application process can be stressful and overwhelming. You may need to jump over various hurdles such as good credit ratings, property appraisals, income declarations before they can consider your loan program. The bureaucracies can have you waiting for more than 45 days for your mortgage approval.
Private money loans are an excellent alternative, with private lenders having less stringent approval processes. The term ‘hard money,’ coined in the 1950s, meant that the loan program was asset-based. The private mortgage is based on the property value rather than the credit health of the borrower. As a real estate investor, you can secure funds to purchase a property by placing it as collateral. Here are five simple tips to get pre-approved for your loan program.
1. Explain Your Loan Need And Request To The Private Lender
Private money loans are primarily equity-based. When you speak with a private mortgage lender, be prepared to tell them what you are trying to accomplish. Do you currently own real estate and are looking to refinance or pull money out or are you buying a property. If you are purchasing a property, do you intend to make this your primary residence or will it be a rental property. If your property a residential, commercial or multifamily property. You private money lender will want to know as much about the property as possible.
2. Be As Specific About The Details As You Can
Your private money lender will need to know about your credit, though poor credit is typically not a reason to turn down your loan request. If you are refinancing a property, how much do you currently owe? Do you have one loan or two loans. What are the terms, payments and interest rates of these mortgages. If you are purchasing a property, what is the purchase price and how much do you plan to put down as a down payment. If this is a fixer, how much do you plan to spend on repairs? How much do you think the property will be worth after you complete the repairs?
What is the purpose of your loan request? This is very important to a private lender. Be as specific as you can when explaining this to your lender.
3. Email, Text, Or Explain The Scenario
If you can explain your loan request and the highlights as clearly as possible to your private lender, this will help in getting your loan quickly approved. What is the address? What is it currently worth? Is it rented out? Is this your primary residence? What will you be using the loan proceeds for? What type of property is it? Being able to answer these types of questions will help you private lender tremendously.
4. Provide As Much Documentation As Possible To The Private Lender
If you have an appraisal, send it to your private lender. If you have a copy of your credit report, or a copy of a lease or any mortgage statements, this information will help.
5. Find a Hard Money Lender in Your Specialty
The best way to find a reliable and dependable private mortgage lender in your area is to ask someone you trust for a referral. If you can not obtain a referral, search the internet for “private hard money lenders” and call and ask questions. Ask your trusted friends or Facebook friends if they know of a private hard money lender. Look on real estate investment and related forums, groups, blogs and sites for private money lender referrals. Call the agency that regulates them and make sure they do not have any problems and are licensed to offer you a private money loan.
Hard money loans provide quick access to ready cash to fund real estate deals. You may need to get the lender to pre-approval before signing any contract. For more information on how private mortgages can work out for your business, reach out to GW Private Capital.
