Real estate investors and those wholesaling houses are often so relieved to find a money source that will lend to them today that they'll leap to sign on the line as soon as a hard money lender says yes. Yet, there are some very good reasons for borrowers to do almost as much vetting of their lenders as they are put through when applying for a loan.
Some investors and property wholesalers may find this perplexing if they have never run into an issue with a mortgage lender before. However, it is obviously much wiser to take preventative measures first, rather than after an extremely expensive mistake.
The U.S. has recently seen a significant and welcome surge in lenders returning to the market including rehab and hard money lenders. Many including commercial mortgage companies trying to step into the fray are getting very aggressive in competing against each other to lend investors their cash.
In many ways this is exactly what property investors, the housing market and U.S. economy needs to experience phase two of the recovery. However, with everyone in the world trying to cash in as a private or hard money lender it also obviously invites its fair share of amateurs, whom even if they mean well, may not be positioned to really execute well.
Recently this has been seen in individual investors taking to online real estate forums to complain of some of these parties running out of cash and being unable to live up to their own loan terms, and the recent big bank debacles should be fresh enough to keep most alert.
For these reasons those flipping houses, wholesaling properties and building rental portfolios all need to do their own homework.
This begins with selecting a lender to apply for a loan from. Referrals are a great place to begin. In the absence of referrals research options online.
Consider requesting proof of funds letters and verify them independently. If lenders are supposed to fund money in additional tranches make sure these funds are deposited into a third party escrow account at closing. Don't fall for promises of what a lender "might" do in the future when the loan balance becomes due or you need more cash. Some unscrupulous lenders and คอนโดมือสอง ราคาถูก loan officers may promise anything to make their numbers. Plan for the worst case scenario, and hope for the best. Be careful in checking all closing documents and ensuring they are what was promised upfront.
Finally recognize that in reality there are plenty of alternatives today, so find the right fit and a lender you can build a relationship with for regular business.
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