Buying Property: Financing Gets Creative With Private Lending and Cash Buys
Private Lending is the trending topic, as real estate investors in major cities all over the nation have begun to turn away from traditional funding sources, in favor of the ease with which they can obtain cash for their investments via private lenders.
It goes without saying that investors who have access to fast cash are killing it in the home buying market; it is highly advantageous for a home seller to accept a cash offer that can materialize quickly from a private lender, rather that one that comes attached to a traditional mortgage and its required, costly, and time-consuming, inspections and reports.
Private lenders, investors and primary home buyers alike are taking advantage of this savvy trend.
Private lenders have rapidly come to the conclusion that the current conservative lending guidelines used by banks and conventional lenders eliminate the applications of many individuals who are, in fact, perfectly capable of paying back their loans.
For example, self-employed borrowers may not have the documentation for qualified mortgages or interest-only loans, but they have the income to qualify. Other potential borrowers may have taken a hard hit to their credit rating during the economic downturn, but are today in good financial shape, regardless of what their credit score has to say.
Most importantly, private lenders take into account a property’s overall value and marketability as opposed to simply the borrower’s credit history- especially as it applies to the last 7 years.
“A large portion of people who don’t qualify for government-sponsored loans now will become good borrowers,” said Rob Bloemker, who started his mortgage career at Salomon Brothers in the 1980s and is now co-founder of San Francisco-based lender Dwell Finance. “We think non-QM lending is going to be really ramped up in a year from now and will be large enough to securitize.”
Joe Anderson, chief executive officer of Irving, Texas-based Caliber Home Loans, expressed a similar sentiment when he said, “We recognize that there are qualified, creditworthy borrowers with home financing needs that are not being served by the agency and government programs that are currently available in today’s marketplace”
Smart investors know that direct access to these private lenders can be key to the success of their real estate investment business. They also know that accessing them can be easy with cutting edge database systems like Find Private Lenders Now; a feat that was not so easily accomplished in the past. One recent student of REWW said, “its like having an open invitation to an exclusive club that was inaccessible in the past”.