Let's take a look at a couple of things concerning private lenders. First of all private lenders are a little different than traditional mortgage lenders. After all the money that is being loaned actually comes from their own pocket. With traditional banks the money comes from the community, so the bank has to be certain that the money will be returned.
Tips Concerning Private Lenders
All potential borrowers should be aware of the underwriting process. Each loan goes through an application, verification and credit check. These checks cost money, they are not free. So if a potential borrower thinks he/she can just fill out a loan application and that's it, they are incorrect.
The opening of the loan case requires an origination fee. This fee is for simply beginning the paperwork process. The fee could cost up to $100. Then there is the credit check charge. This charge could be around $25.
It is always important for the property owner to have the property appraised. The cost of the appraisal of a home could be up to 1% of the total cost of the home. For example, if a home costs up to $400,000, the appraisal costs could be around $1500.
The appraisal is conducted by a professional appraiser. The property can not be used as collateral unless this event takes place. It is important to know the value of a piece of property, prior to putting it up for collateral.
Once the appraisal has been conducted the loan process can continue. Property assessment is perhaps the most important part of the loan process. This assessment can make or break the deal. If the property does not have enough value to cover the total balance of the loan the property owner will have to add more real estate.
If another piece of real estate is needed, the potential borrower will have to pay for a second appraisal. This can be annoying to any applicant. Nashville hard money lenders will try to find a way to make the underwriting process as tedious as possible.
Title searches are done during the underwriting process in order to make certain that the property is indeed in the property owners name. They are also done to ensure that there are no liens on the property. Obviously, if there are liens on the property the real estate will not be able to be offered as collateral.
The entire loan process can take up to 2 months. Typically, it is completed within one month. Traditional mortgage lenders take a lot longer. The average wait for a traditional bank can be around 6 months. There are signatures that are required in order to complete the application. Because of the needed signatures that is also why the time is lengthened.
Now, when it comes to the collateral process private lenders do it a little differently. They are known to accept different types of collateral, other than simply property real estate. Because the money that is being used belongs to the actual lender, certain corners are able to be cut. More leniency is able to take place when the money isn't some else's. Nashville hard money lenders try their hardest to make the loan process as simple as possible.
Traditional mortgage lenders generally only accept property real estate to be used as collateral. Private lenders will accept boats, cars, businesses, retirement funds and more. As long as the item has significant value and can prove to belong to the lender. Private lenders make choices based on the interview. If the individual appears to be trustworthy than yes, various types of collateral will be accepted.