Dallas-Fort Worth Real Estate Investor Club

Investment Lending 101 (Part 3: What to Expect)

  • 30 Nov 2016 6:05 PM
    Message # 4432971

    You’ve got a home identified that you want to purchase, you’ve negotiated a price, and executed a contract – what should you do next?  Well, you should actually take a step backwards!  The steps below will highlight different steps when it comes to lending.  Here’s the steps to expect:

    1.       Shop Lenders – How much did your shoes cost that you have on right now?  Did you try them on first?  How about your pants?  Your shirt?  So why aren’t you trying on different lenders to see which one fits for you?  This is WAY more expensive than your pants.  Do some comparing!  Ask the lender to show you a “Fee Worksheet” – it will have all of your costs broken out for you loan like a grocery receipt.  If they can’t provide you with a Fee Worksheet it might be a clear sign of something!  This will likely be the LARGEST PURCHASE you make (next to your own home) even a small different can add up to a $30,000 difference at the end of the loan.  Shop and compare.

    2.       Get PreQualified – What you don’t want to have happen is you find a home and have to wait 60 days to be qualified and you lose the deal and your earnest money because it took too long.  That would stink.  So get “PreQualified” or “PreApproved”

    a.       PreQualified – you’ve spoken with the lender, talked through your scenario, and they have checked your credit.  Everything sounds good and they will issue you a letter saying you can buy a home.

    b.       PreApproved – you’ve spoken with the lender, talked through your scenario, and all of your documentation has gone through UNDERWRITING.  This might take a few days to go through underwriting but your qualification is much better.  You know you are in a great position to close your loan if you are PreApproved.

    3.       Tell your Lender! – If you are using hard money you will want to keep them informed the moment you find a home.  The moment you have a contract executed then please tell your lender! Give your lenders each others contact information.  Your realtors too! Time is money.  You want the work to be completed quickly so you can flip it TOMORROW!  Or if you are buying and holding then tell that conventional lender so he/she can start the refinance.  Don’t wait until after the work is completed.  That means you’ll have to wait longer to get out of the hard money.  Keep your lenders informed.

    4.       Appraisal this and Appraisal that – Did you know your contract should have a clause in it that if the appraisal does not come back as expected you can back out of the transaction?  Your hard money lender will perform an appraisal and so will your conventional lender.  If you are using both lending types then you will be receiving two different appraisals.  Expect it.  The appraisals are there to protect you and the lender from being overpriced by the seller.

    5.       Closing – Hard Money lenders can close as soon as title is cleared (about 10 days).  A conventional lender can close in about 30 days (depending on the lender).  A refinance will be slightly longer (about 40 days).

    The more work you do in the beginning the less work you will need at the end.  Buying a home is stressful.  Renovating a home is stressful. Selling a home is stressful.  Mitigate your stress by doing these steps and know what to expect!  Up Next:  PART 4:  The Numbers!

    Andrew Postell

    Gateway Mortgage

    817-873-0621

    Andrew.postell@gatewayloan.com


    Last modified: 30 Nov 2016 6:18 PM | Andrew Postell
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