Fix-and-flip as well as rehab-and-rent real estate investors find many benefits when they get their financing from private mortgage lenders in PA. It’s a whole different ballgame than playing with the big banks. Funding from private mortgage lenders is so much more suited to the needs of real estate investors. Here are four of the reasons why investors want to work with private mortgage lenders in PA.
1. Private mortgage lenders eliminate red tape and require less paperwork
Trying to get a traditional mortgage from a big bank can be very challenging for real estate investors who aren’t really looking for a house to live in, but a house to renovate and resell. That mismatch is just the beginning of the red tape they’ll need to get through. Banks require a verification of income, which can be challenging when you’re self-employed. And that’s just the start of the paperwork! This is one of the lasting effects of The Dodd–Frank reforms; it’s much harder now to get a mortgage. Craig Strent, the head of a home loan company explains, “It’s not hard to qualify, it’s hard to get through the process because of the massive amounts of additional documentation that is now required.”
But you’re not looking for a home loan! You’re looking to acquire a property you can rehab. That’s why private mortgage lenders in PA will start with your proposed house to buy and rehab. They want to see that you’ve lined up a good deal and that you will make a decent profit when the project is completed. This eliminates the red tape and greatly reduces the amount of paperwork.
2. You can get a much quicker loan quote from private mortgage lenders in PA
Hard money loans and private mortgages are MUCH faster borrowing from a traditional bank. Once the lender has all the necessary information, again mostly about the deal (and just a little about you), you can get a quote on the loan almost right away, depending on whether an appraisal is required or not. If you pre-qualified you’ll already have a good sense of whether you’ll be approved. Meanwhile, the bank mortgage takes 30 to 45 days to get approved—you probably want to move faster than that!
3. Private mortgage lenders can fund a loan faster
Urgency on your part does not speed up the bank. When you work with private mortgage lenders in PA who have experience working with real estate investors like you, they will be sensitive to things like the looming expiry date on your purchase offer. If they approve your loan, they will usually do whatever they can to see to it that your deal goes through.
4. You can buy the kind of distressed homes where banks would say “no”
This is the art of the flip: finding a distressed home for the lowest price, putting the needed money into rehabbing it and then selling it for a great profit. It’s hard if not impossible to get a mortgage from the bank for a home in poor condition. Private mortgage lenders know that’s exactly the kind of the house you can make the most money on.
We’ve only just started this list of reasons why real estate investors want to work with private mortgage lenders in PA. There’s also the convenience of dealing with lenders who understand your business, loan terms that better fit with what you’re doing, and the increased number of deals you can work on at one time. What’s important to realize is that you have options and private mortgage lenders open up many of those options to real estate investors in Pennsylvania.