Getting a Hard Money Loan Is Not Easy

Such as everything in today’s lending world there is reality and there is fiction and there is borrower’s reality. Recently I received an email from a broker, asking me if we were really funding loans ?. At first I thought that this was a weird questions, however, giving it a second thought I realized that this was an important concern from brokers and their clients. Today, I will try to go over why loans are approved and funded and why some are not approved and funded.

Because of low barriers to entry into the real estate industry there are a number of people with limited experience who follow the band wagon. Today some of these activities are Hard Money / Private Money lending, Loan Modification, REO Investments etc.. The lack of experience creates difficulties for brokers and their clients, as brokers realized that what was promised will not be delivered. Another issue for brokers is that to lock a potential deal, they are being quoted rates and points from funding sources before a loan has been reviewed. Once the loan is underwritten, different terms are being given.

Loans are approved and funded if:
- Borrower(s) understand that they need to be flexible
- There is limited rate shopping as the solution is more important than the rate
- There is a package well put together
- Broker, Borrower and Funder work well together
- Borrower(s) are realistic

Loans are not approved and funded when:
- Borrower can not make monthly payments
- Properties is not well kept
- Ltv is high
- Borrowers have not realistic idea of value

The bottom line if a financing you requested is approved just take it.