Banks used to be the only option for real estate investors trying to take out loans . Nowadays , private money lenders are allowing investors to borrow money under more flexible conditions . Banks and traditional financial institutions can reject your loan application for multiple reasons — your credit score , your debttoincome ratio , employment status , etc . What private money lenders do is implement a framework that makes it easier and more conducive to be 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 through a bank can often be lengthy and complicated . Many of the solutions and loan programs from private money lenders are easier and quicker to get than through banks , which is why private money loans are often better options for real estate investors .
Making Investing Easier
What private money lenders like Stratton Equities do is accommodate real estate investors .
“ Real estate investors , as we all know , don ’ t have the greatest of tax returns ,” Stratton Equities ’ CEO Michael Mikhail said . “ They move money around , have different trusts , and have different accounts . Banks absolutely frown upon that , and they actually hate it . Good luck getting a loan through a bank or mortgage company if you ’ re a hardcore real estate investor .”
The programs offered by private money lenders are designed for investors , who oftentimes can ’ t show their income and make a lot of monetary transactions . Companies like Stratton Equities have put in place certain standards that make it easier to take out a real estate investment property mortgage . These include no tax returns , no upfront fees , and no junk fees .
The closing time for loans from private money lenders is much faster . This element can be crucial for investors , as sometimes the faster you close , the better chance you have at securing a transaction . Also , the LTV ( loan to value ) ratio is higher with private money lenders . Loans from traditional institutions on investment properties usually max out at 70 % LTV , while those from private money lenders such as Stratton Equities can go up to 85 %. You ’ ll likely be spending less through private money lenders too . “ If you go to a bank , you ’ re going to have PMI ( private mortgage insurance ) with those loans , a few extra hundred dollars per month ,” Mikhail explained .
The Loan Process
The first thing you ’ ll want to do to get a private money or NONQM loan , for example , a hard money loan , is to contact a private money lender . As the borrower , you should be ready to provide the lender with information like the location of the property , purchase price , and estimated appraised value .
The lender will ask questions to get to know you and your borrowing history . After this , the lender will appraise the property and come up with a loan offer for you . The lender will review the documentation and complete the underwriting process for the loan . This process is usually speedy , but it varies from lender to lender .
After the loan is completed with underwriting , it gets moved to the closing department . As a borrower , you ’ ll have to sign a variety of documents during this phase , but it is relatively straightforward . The lender will then send the funds to the title company so the deal can be completed .
Many real estate investors have found that getting loans from private money lenders is their best option for achieving their investment goals . Be it a hard money or a soft money loan , private money lenders are faster , more understanding , and more lenient than mortgage companies and banks . You have to consider that these companies ’ sole purpose is to give loans to real estate investors , so naturally , they ’ ve found ways to make the process smoother . If you ’ re thinking of getting into real estate investing , you should definitely take these factors into account .
Contact Stratton Equities , the leading hard money and NON QM lender , to speak with one of their talented and experienced loan officers at 8009626613 , email them , or apply for loan prequalification today .
" Real estate investors , as we all know , don ’ t have the greatest of tax returns ."
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Michael Mikhail
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