How to Submit a Hard Money Loan: Tips for Real Estate Investors

Submitting a hard money loan can feel like an intimidating task for real estate investors looking for funding. But if you know how to submit a hard money loan, it’s easy! This blog post will give you the necessary insight on how to effectively submit a hard money loan that will increase your chances of approval and help you get the funding you want.

Using a basic loan summary to submit hard money loans to your lenders is key to successful loan submissions. By following these steps that I outline in this article, you’ll receive the best possible outcome and get funded fast.

To submit a loan to a hard money lender to get a yes or no answer quickly, you need a loan summary and photos. If the property is a fix and flip, you’ll also need your comparables to support your after repair value and an estimated rehab budget.

Here’s your cheat sheet, check this out! Below is a basic “loan summary” and it includes all of the information that a private money, hard money lender will need to give you a yes or no answer. Lenders are busy, and so are you, so use this form to give them a snapshot of the loan, to see if it fits in their parameters.

The below loan summary includes the most important details about the property and the deal that you need funding for such as property address, property description, property value, etc. When a private money, hard money lender gets this loan summary from you, you are going to get his/her attention and you’ll definitely get a yes or no answer quickly. Providing a loan summary to your lender also shows that you’re organized and on top of your game.

What is the most common mistake that borrowers make when submitting hard money loans? It’s so simple that you’ll be surprised to hear that it’s just….property photos! Yes, people almost always forget to send property photos when they are submitting a loan to a private money, hard money lender for approval. Even if you have just one, front, exterior photo, send it to your lender along with this loan summary. The more photos the better!

Keep this tool in your toolbox because you’re going to need it if you want to get funding fast from a private money, hard money lender. And if you have any other questions about loan submissions to hard money lenders, leave them in the comments below.

Property Address: This is the physical address of the property that the loan will be used for.

Property Classification/Type (Residential or Commercial?): This is the classification of the property, whether it’s a residential or commercial property.

Property Description: IF RESIDENTIAL: # of beds/# of baths/sq footage, lot size, garage? Year built? This provides details about the property such as the number of bedrooms and bathrooms, square footage, lot size, garage, and the year it was built.

Property Description: IF COMMERCIAL: How many buildings? Total bldg. sq. footage, acreage, year built. This provides details about the commercial property such as the number of buildings, total building square footage, acreage, and the year it was built.

IF PURCHASE: List purchase price or offer price: If the loan is for a purchase, this will list the purchase price or the offer price for the property.

IF A REFINANCE: List amount of debt to be paid off with new loan requested: If the loan is for a refinance, this will list the amount of debt that the borrower wants to pay off with the new loan.

IF A REFINANCE: Amount of loan fees/ interest reserves requested in addition to base loan amount: If the loan is for a refinance, this will list the additional loan fees or interest reserves requested in addition to the base loan amount.

IF REFINANCE: When purchased? For how much? This will list when the property was purchased and for how much it was purchased.

List amount of repairs or rehab: This will list the amount of money that will be used for repairs or rehab on the property.

Property Value: (based on?) This will list the value of the property, based on an appraisal or other valuation method.

Current lien(s) if not applicable please put, n/a: This will list any current liens on the property, if applicable.

Loan Term Requested (How long do you need a loan for?): This will indicate the length of time that the borrower needs the loan for.

Exit Strategy (How do you plan to pay the loan off?): This will list the borrower’s plan for paying off the loan, such as through refinancing or selling the property.

Use of funds: (Please provide brief breakdown of the loan needs): This will provide a brief breakdown of how the loan proceeds will be used, such as for purchase, repairs, or refinancing.

How soon needed by: (Is there a contract date we should know about?) This will indicate the date by which the funds are needed, such as if there is a contract date to close on a property purchase.

Buy a home with Cash, Using Hard Money

Make Competitive Cash Offers To Buy A House

Do you want to buy a home with cash and make competitive offers that mimic all cash offers with no contingencies? Does it sound too good to be true? It’s not. It’s called using a hard money loan.

These loans work more like a line of credit than a loan. In most often they don’t go on your client’s credit at all. So how does it work? Your clients get approved with us for a line of credit rather than a permanent type of loan.

Once they’re approved, they can go out and make competitive offers that mimic all cash. These loans can close in as little as five to seven days with no contingencies.

An Example of Client that Bought a House as Cash

Let me give you an example. One of the realtors that we work with a lot. Her client wanted to make a very low offer on this property. We’d approved him for a line of credit with us. And the seller accepted his offer, which was a very low offer. As I said, because he could close in five to seven days with no contingencies.

Hard Money Loans are Competitive

How competitive is that? And if you think private money loans are super high cost and won’t work for your clients. Think again alone. Except, for example a loan that’s 9.5% that your client only keeps for two months before they refinance with long term financing. Actually only cost them 1.85% in interest.

What a low cost when you consider the high cost of losing a deal, you just can’t put a price on losing a deal.

Do you want to help your clients make cash like offers with no contingencies so you can get better deals on properties? Think about using a private money mortgage. If you don’t understand how these mortgages work, you should. Realtors that understand how these mortgages work. They make more money and close more deals.

So reach out to us and let us help you understand how to use private money mortgages to help you close more deals and faster for your clients. I’m Corey Dutton. I’m a licensed private money lender. Reach out to me.

Beware of Broker Chains and Joker Brokers

Beware of broker chains and excessive broker fees. A “good” loan broker can get your loan funded quickly. (A broker is someone that takes your loan directly to the lender to get funded). A “good” loan broker is worth its weight in gold!

Any fee you pay to a “good” loan broker is money well spent. And why? Why not go directly to the lender? A good loan broker knows all the “real” lenders because the good broker has worked with all of the real lenders before. A good broker is going to submit your loan to multiple lenders simultaneously. And what does that do? That increases the chances that your loan is going to get funded!

Now what is a “bad” broker that you want to stay away from, and why are they bad? Let me tell you more. A “bad” broker, I like to call them “Joker Brokers.” A bad broker doesn’t know who the “real” lenders are. A bad broker is going to just take you to another broker, and then that broker is going to take you to another broker, and then that broker may or may not be connected to a “real” lender. So, before too long, that bad broker is going to get you involved in what’s called a “broker chain.”

Now what is a broker chain? You may or may not have heard this term before, but it’s exactly what I just described. You go to a bad broker and this broker doesn’t know who the real lenders are. They haven’t closed loans with any real lenders. They think that brokers, other brokers out there who are actually brokers, are the real lenders. So they’re taking your loan request to a broker, who then takes it to another broker, who then takes it to another broker, and that’s your “broker chain.” It’s a chain of brokers.

So what’s bad about that? Well guess what? You have to pay every, single one of those brokers a fee in that broker chain. And that’s why they’re bad. So if you find out that you’re in a broker chain? Fire those brokers and start over.

Paying Excessive Broker Fees

This brings me to my next topic which is paying excessive broker fees. Watch out for excessive broker fees. This is where I’m going to talk a little bit more about the “Joker Broker.” And why do I call them Joker Brokers? Because as a private money lender these brokers are pure comedy, they are just laughable. Let me give you an example.

I had a broker come to me to fund a deal. He sends me 15 different e-mails in a row about this loan request. And in the subject line of every, single email, there were the letters “FW:” (which means “forwarded”). The broker had forwarded those 15 e-mails directly from the borrower, and each one of those e-mails had infinite number of attachments. But guess what? In all that information the broker sent me, there wasn’t even a loan amount listed! I couldn’t even find the property address!

After hours of sifting through these 15 different e-mails, I went back to the broker and I said, “Yes, we’re interested in the loan, can you tell me a little bit more about this deal?” The Broker didn’t know anything about this loan! Nothing. He went blank! But the best part? Within a few minutes he emailed me yet again, and this time he sent me his “fee agreement.” I opened it up and I just about fell off of my chair. This is where the comedy comes in. This is where I say these joker brokers are just laughable.

Guess what it was? It was 5 loan points he wanted as a broker fee! 5% of the loan amount as a fee for forwarding me a bunch of e-mails from the borrower, and not knowing one snippet of information about the loan request! (It was a $3.5 MM loan amount with a fee agreement of 5 points, 5% of $3.5 MM is a $175,000!) He had done no work, he had just forwarded me all of those emails with attachments from the borrower directly. The broker didn’t even know the loan amount, or the property address, off the top of his head when I called to discuss the loan with him.

So I laughed in his face. And you know why? Because I don’t want to deal with a borrower that would sign such an agreement and pay a lazy broker like that an excessive fee. Why? Because it proves they’re stupid. And if you do the same thing when you’re out there looking for money, you’re probably going to get laughed out of the room just like he did. Let me give you another example of a joker broker.

These joker brokers send me e-mails and they’re attaching all of this sensitive information, private information, about the borrowers. And in these email attachments you’ve got social security cards, you’ve got driver’s licenses, you’ve got tax returns! This is sensitive information! Most asset-based lenders don’t even ask for that stuff until they’ve preliminarily approved the loan request, if at all. But these joker brokers, they’re sending this sensitive information to a private lender in the first e-mail, and guess what? Not even a loan amount listed! Not even a property address listed! Again, this is why I call them “Joker Brokers.”

If you’re looking for a loan, a “good” broker is worth its weight in gold. But a “bad” broker that creates “broker chains” and charges excessive fees is going to cost you time and a grip of money. And if you’re a borrower, and you’re out there looking for money, make sure you know what broker you’re dealing with, and determine pretty quickly, is this a “good” broker or “bad” broker?

And if you’re a broker that’s watching this, and you’ve taken offense because maybe you’re doing this kind of stuff? You might want to change your business model because it doesn’t work for private money lenders!

If you have any questions, complaints, or comments, please leave them in the comments section below. If you found this post useful, or you know someone looking for a loan that’s gotten themselves in this position with a broker, share this post with them!

Why Every Real Estate Investor Needs Private Money Loans

Opportunities seem to come in 3’s as they say. In real estate, opportunities always seem to come in 2’s and 3’s. Because the supply of inventory is tight in some U.S. markets, when good real estate deals arise, you really want to do multiple real estate deals at the same time. However, this is hard to accomplish if a real estate investor only has enough cash to do one deal at a time. For this reason, the most successful real estate investor will always have a good private and hard money lender to finance multiple deals simultaneously. This is where a real estate investor has a competitive edge in the marketplace.

Many people have the view that private money and hard money loans are costly. What about the cost of the opportunity lost if you only have enough money to do one deal? Let’s say three real estate deals appeared to you within the next 30 days. What if the numbers really made sense on all three? If you only have enough cash to do one deal at a time, how would you choose one deal over the others? Wouldn’t it be better to do all three deals if you could? Private and hard money lenders make this type of scenario a reality for real estate investors.With hard money and private money loans, you can make your own cash go further.

A very successful real estate investor friend of mine has always worked on many deals simultaneously. He has accomplished this by using private and hard money lenders to lend on the purchases. He is now retired as a multi-millionaire, and he says that he never could have made it so big without using private money lenders. If you’re a real estate investor that wants to take it to the next level, take a closer look at private money loans.

Read more about our real estate loans by clicking here: https://privatemoneyutah.com/loan-programs/

Get a Head Start on Commercial Real Estate Financing in 2013

Are you a real estate investor who is seeking commercial real estate financing for your new acquisitions this year? Or are you one of many property owners that have commercial property loans coming due in 2013 ? Don’t wait until the last minute this year, as many experts have predicted that banks will have tighter lending standards on commercial property loans in 2013. With new banking standards to be imposed on both large and small, local banks, many banks will be forced to raise capital to comply with new reserve requirements. Although these regulatory measures may be healthy for the larger banks, many fear these measures may put the small banks out of business.

Because the smaller, local banks have been providing a lot of commercial real estate financing in recent years, real estate investors may want to pursue as many avenues for loans that are available, including commercial bridge loans. Bridge loans are also known as a hard money commercial loans. These types of loans are usually faster than a bank loan and can close in under 2 weeks. Although a bank loan is always the first choice for real estate investors, it may be wise to consider as many financing options that may be available in 2013. Commercial bankers and brokers will make big promises, but it’s important to have multiple back-up plans should those big promises go unfulfilled. Because many experts say commercial real estate financing will be tighter in 2013, make sure you get a head start this year.

For more information on our commercial bridge loans click here.

Banks Use Every Reason to Decline Loans – Private Money Lenders Are Good Option For Borrowers

A lot of people have experienced how hard it is to obtain a bank loan. Bank underwriting criteria in today’s lending environment is almost unbearable. There are a lot of loan brokers that have shared their stories with me recently about their borrowers having a perfect credit score, good assets, and excellent income but still having difficulty obtaining a bank loan. For this reason, more people are on the hunt for hard money loans or private money loans than ever before. These loans are needed for investors to take advantage of fleeting opportunities or for some of them to make a new start after losing everything. (What is a hard money loan? Read about the 5 most common questions that people have about hard money loans here)

Those who previously thought they would never need a hard money loan, are now resorting to private money loans in order to seek out new opportunities or to get themselves out of distressed circumstances. The high interest rates charged by hard money lenders are always a source of contention for both mortgage brokers and borrowers, who are enticed by the articially low, interest rates available to those who qualify.

Hard money loan interest rates are not governed by the same rules as mortgage loan rates. Non-bank loan interest rates are governed more by supply and demand and by competition among lenders for loans. And as more and more private money lenders pull money out of other investments and use it to make hard money loans, interest rates charged on non-bank loans will gradually get lower, and lower. Until then, borrowers who need loans will need to use hard money loans and pay higher interest rates until banks open up their tight lending requirements again.

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Posted by Corey Curwick on October 12, 2012