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A mortgage loan broker finances conventional residential lending scenarios using Fannie Mae or Freddie Mac’s loan programs. However, a mortgage loan broker also has financing opportunities offered by government resources, like the Federal Housing Administration (FHA) and the Veteran’s Administration (VA). However, government loans are not the same as conventional loans because these residential loans are not funded by these agencies, they are actually guaranteed by these agencies. A loan broker’s responsibilities often place the real estate loan broker in a tenuous position; having to negotiate between their homebuyer’s requests and the investor’s underwriting guidelines, to make the deal work.
The modern-day loan broker, though, possesses the unique ability (and the financial creativity) to place “round loans” into “square-peg guidelines.” A loan broker is well aware of just how intricate the loan process can be, from loan origination to loan servicing. The bridging loan broker takes advantage of every loan source so they have the ability to meet the needs of their client and to manage a profitable business.
A mortgage loan broker should be excited to learn that there are additional financing sources for those hard-to-place residential mortgage loans. Residential lending resources have grown dramatically in the recent past. Private mortgage lending is an example of a ready-made loan broker opportunity to use when financing scenarios do not meet conventional guidelines.
A loan broker can now turn to private money lenders who have the ability to offer viable financial techniques, should they need to fund a unique residential loan, or two, or three.
Residential loans funded by private money still must follow predetermined underwriting guidelines. These guidelines are, however, less restrictive, making them easier to qualify for. A mortgage loan broker trying to fund an atypical loan scenario should take advantage of the following benefits offered by private money lending institution:
The mortgage application is easier to complete and to submit to the lender.
The mortgage processing time is reduced because some of the usual paperwork is not required when qualifying for a hard money home loan. The approval process typically takes only a few weeks.
The intensity and quantity of loan guidelines are reduced significantly.
Loan brokers can use this private money for any loan purposes: as a refinance or as purchase money.
Private money mortgages are acceptable for a first position lien, a second position lien or even a third position lien, and anything else in between.
Acceptable collateral varies by loan product but likely includes primary residences, second homes, single-family homes, multi-family home and even some commercial properties or vacant land.
The underwriting objectives are primarily focused on the quality and value of the property. The underwriting guides for private money are not generally geared towards the borrower's historical and current credit profile.
Private Money Mortgages Are the Perfect Solution for the Fixer-Upper
Homes in need of substantial repairs are extremely difficult to fund using conventional home loan methods. Under these circumstances, it doesn’t even matter if the borrower has stellar credit; there are simply no compensating factors strong enough to overcome the inherent risks found when purchasing a property in need of repair. These private loans are a great financing source for home flippers as well because the terms are more appealing for those homebuyers seeking to flip the property quickly. Hard money loans are also available for vacant homes that have been vandalized. It provides the funds needed to bring the vandalized property up to meet current building and safety codes.
If one considers the vast amount of available funds in the hard money lending game, it is easy to see why they are a popular choice among mortgage loan brokers.
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Loans are offered under either: California Bureau of Real Estate License 01897444 or California Finance Lender License 6054605
Mortgage Loan Originator, NMLS license no. 945582