Banks were the only option for real estate investors trying to take out loans. Nowadays, private lenders allow investors to borrow money on more flexible terms. Banks and traditional financial institutions can reject your loan application for a variety of reasons — your credit rating, your debt ratio, your employment status, and so on. a real estate investor.
The real estate market moves fast, and it is often crucial to act quickly. But the process of getting a traditional loan from a bank can often be long and complicated. Most loan solutions and programs from private lenders are easier and faster to obtain than through banks, which is why private loans are often better options for real estate investors.
What private lenders like Stratton Equities do is accommodate real estate investors.
“Real estate investors, as we all know, don’t have the best tax returns,” said Michael Mikhail, CEO of Stratton Equities. “They move money, have different trusts and different accounts. The banks absolutely disapprove of it and they hate it. Good luck getting a loan from a bank or mortgage company if you are a die-hard real estate investor.
The programs offered by private lenders are designed for investors, who often cannot show their income and perform many monetary transactions. Companies like Stratton Equities have certain standards in place that make it easier to take out a mortgage for real estate investment. These include no tax returns, no upfront fees, and no unwanted fees.
The closing time for loans from private lenders is much faster. This can be crucial for investors because sometimes the faster you close, the more likely you are to secure a trade. In addition, the LTV (loan to value) ratio is higher with private lenders. Loans from traditional institutions typically reach a maximum of 70% LTV, while those from private lender Stratton Equities can reach 85%. You will likely spend less with private lenders. “If you go to a bank, you will have PMI (private mortgage insurance) with these loans, a few hundred dollars extra per month,” Mikhail explained.
The loan process
The first thing you will want to do to get a private money loan or a NON-QM loan, for example, a hard money loan, is to contact a private money lender. As a borrower, you should be prepared to provide the lender with information such as the location of the property, the purchase price, and the estimated appraised value.
The lender will ask questions to get to know you better and your borrowing history. After that, the lender will assess the property and offer you a loan offer. The lender will review the documentation and complete the loan underwriting process. This process is usually quick, but varies from lender to lender.
After the loan is completed with the subscription, it is transferred to the closing service. As a borrower, you will need to sign various documents during this phase, but it’s relatively straightforward. The lender will then send the funds to the title company so that the transaction can be completed.
Many real estate investors have found that obtaining loans from private lenders is their best option to achieve their investment goals. Whether it’s a hard money loan or a low rate money loan, private money lenders are faster, more understanding, and more forgiving than mortgage companies and banks. . You have to consider that the sole purpose of these companies is to lend to investors, so naturally they have found ways to make the process smoother. If you are thinking of getting into real estate investing, you should definitely consider these factors.