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Why Every Mortgage Broker Needs to Connect With Private Lenders

Why Every Mortgage Broker Needs to Connect With Private Lenders

Even brokers who usually work with traditional lenders can benefit from a relationship with a good private lender. Banks and typical mortgage companies won’t touch some kinds of loans or some types of buyers. Unless the broker can find alternative financing for a tricky commercial property loan or even some home loans, they will lose the deal. Learn more about the ways that private lenders can offer more opportunities to help improve a brokerage business.

When Does a Commercial Loan Need Private Investment Money?

Some companies need to purchase property before they can generate the revenue that they need to qualify for a regular business loan. They have a chicken-or-the-egg problem. However, private investors can offer them a commercial property loan to help them solve it. This is because these private investors consider the value of the property as one of the main factors to qualify the loan.

Private lenders can usually gather the information they need to make decisions quickly. This way, the business can obtain funding, get to work, and then look into obtaining separate financing later to pay back this type of loan. Because private lenders typically offer short-term financing until companies can gain financing, these kinds of loans are often called bridge loans.

When to Seek Private Home Loans?

Homeowners might need to seek private lenders for a variety of reasons. One of the most common examples includes people who need to buy a new home before they can sell their old one. With a mortgage on the old home, these clients might not qualify for the new loan. This frequently happens when homeowners get abruptly transferred by their company or get a new job in a different city. The owners know they will need to make payments on two homes for awhile; however, they have decided it’s the best financial decision to wait until they can get offered a good price for their first house.

These homeowners have to find a home for their family to live in quickly, and they can’t afford to wait until they sell the first house. Again, private lenders will primarily consider the value of the property that they will lend money for. They may also consider the reason that the homeowners want to buy a second house before selling the first. Private lenders can also make decisions much faster than banks can, so the family can get settled in a new city quickly. Once the first home sells, the family should qualify for a traditional mortgage and be able to pay the private lender back promptly.

Private Investment Property Loans

Property investors may have to act quickly when they find a good deal on an investment property. They certainly can’t wait weeks or even months for a bank mortgage officer to make a decision. If investors want to purchase multiple properties, they may never be able to qualify for regular mortgages anyway because their debt ratios will be too high for a regular mortgage lender.

Private investors qualify borrowers differently. They can offer lending approvals and cash quickly, so the investor can take advantage of the deal before it gets snapped up by a competitor. Property investors often plan to rehabilitate and sell the home, which gives them the funds to pay the lender back and take a profit.

Why Develop a Relationship With Private Lenders?

Of course, all private real estate lending companies aren’t the same. Even though it’s realistic to expect higher interest rates from private loans, it’s only fair for brokers to find lenders who will offer their clients rates and fees that are competitive with other private lenders. Mostly, brokers know that their clients want quick loan approvals, rapid funding, and minimal paperwork.

Construction Loans: What You Need to Know

Construction Loans: What You Need to Know

If you are planning to build a new home or perform extensive rehabilitation work on an existing home, a construction loan can help you get the money you need to complete the project. However, construction loans are different from a standard mortgage. If you are interested in this type of loan, you need to work with a lender who has experience with construction loans and can help you find the solution that is best for your needs. We have the experience and resources necessary to help you move through the application process quickly and secure the funding you need.

What Is a Construction Loan?

A construction loan is a loan you can use to build a new home or possible make renovations to an existing home. In most cases, a construction loan is a short-term loan with a maximum term of approximately one year. Once your project is complete, you can apply for a traditional mortgage to replace the construction loan if necessary. Construction loans are also considered hard money loans in most cases, which means they are asset-based loans with higher interest rates than a traditional mortgage. Interest rates may also be variable over the loan’s term.

Because construction loans are so different from other types of home financing, finding an experienced lender is essential. A lender with an in-depth understanding of construction loans can simplify this process and help you get the money you need with as little difficulty as possible.

Will I Be Approved?

When applying for hard money loans like a construction loan, you must provide a variety of information about your financial situation. Some of the factors we will consider when deciding whether to approve your application include:

  • The current value of your property.
  • The estimated value of the home after it is complete.
  • Your income.
  • Your credit history.
  • The income and credit history of any co-borrowers.

Our construction loans have specific requirements you must meet in order to qualify. The exact requirements will depend on the specific type of financing you request. We will discuss all of these details with you as you prepare your application. After we pre-approve you for construction financing, we may request additional documentation before finalizing the loan.
Keep in mind that a construction loan will not act as a long-term mortgage. Once your construction project is complete, you may need to secure a traditional mortgage loan.

How Much Money Can I Borrow With a Construction Loan?

Construction loans are designed to help you complete a project, whether it be a renovation or a new home. For this reason, the amount of your construction loan will be higher than the property’s current appraised value, leaving you with a loan-to-value ratio higher than 100 percent. The exact amount you can borrow depends on the specifics of your intended project and your financial situation. Contact us today to learn more.

How Quickly Can I Be Approved?

If you are ready to begin a construction project, you will want to get a loan as quickly as possible. Fortunately, our company has significant experience providing construction loans to borrowers, and we can help you move through the application and approval process quickly and efficiently. Every borrower is different, but we will do our best to get you the money you need fast so you can start working on your new home.

Contact Us

We are proud to offer construction loans for all types of projects. Please contact us today to learn more about construction loans or to begin the application process.