School of Hard Money > Borrowers 101
As the name implies, private money lending is the business of lending money, secured by real estate, through private investors. These investors could be individuals with funds to invest or groups of individuals who fund private loans. These loans are secured by real estate.
Banks Lend Using the 3 Cs: Credit, Capacity and Collateral.
Credit is the borrower’s credit score and payment history, capacity is the borrower’s ability to make payments, and collateral is the asset pledged as security for the loan. Borrowers well suited for private loans usually do not fully qualify for the stringent credit and capacity requirements of a bank even though they have sufficient collateral. Private loans can be a great win-win scenario. The borrower wins because he or she gets the loan they desire and the private money lender and the investor wins because they can create an opportunity to earn an above average return.
Newmark Investment and Loan provides the important link between the borrower and the private investor, getting you the money you want to borrow.
Newmark Investment and Loan acts as a mortgage broker and is in the business of matching borrowers with investors. Newmark packages and coordinates your loan from start to finish and arranges the servicing of your loan.
Because private loans are not "cookie cutter," nor are the investors who provide the funds, loans that are coordinated at Newmark could have different specifics or terms.
Here is the process that you could expect in an Equity/Hard Money loan
Make application and provide all necessary documentation. Step one is to complete a loan application or loan interview. This will give Newmark a snapshot of your equity position and borrowing details. Be sure to provide complete and full disclosure on these forms or during the interview. Don't be afraid to share all the details, unique situations are the norm with equity loans.
Depending on your situation you may be asked to provide additional information including: tax returns, financial statements, bank statements, valuation information on other properties owned, and leases.
Newmark will evaluate credit, assets, income and property to determine if you qualify for available loan programs. Newmark understands that issues may arise on the credit or title report or with the collateral real estate. Newmark is good at working with you to resolve problems. The more information you can provide specific to your situation, the quicker you can get to a confident yes or no on your loan.
If you qualify, the best loan program is determined, terms explained and disclosures provided. The amount of funding available and the loan terms will vary depending on the equity of the real estate and the borrowers ability to repay.
Newmark will order a title report, appraisal, and escrow services. Once the documents are in and the loan and investor are identified, the loan can proceed to escrow.
The Title report and appraisal are reviewed. Any problems will be disclosed, possible remedies discussed.
Newmark reviews the completed loan package and issues final approval. After property valuation and title is reviewed by the investor, Newmark will let you know the loan has been approved and ready to "go to docs."Sometimes Newmark generates documents in their office and sometimes they use an outside company.
Expect a few days for this process, and give yourself a day to go through them before your signing to make sure everything is in order and that you have a clear understanding of the terms.
- Sign Documents.
You sign your loan documents. Once the loan is approved to close, you may sign your documents at the escrow company, at the Newmark office or arrangements may be made to use a notary service to come to you at your home or office to execute the closing package.
- Loan Funded.
Loan(s) is funded by Newmark. Once documents are signed, Newmark will arrange to have the funds wired to the escrow company.
- Documents Recorded.
Documents are recorded with county. The escrow company arranges for the appropriate documents (deeds, mortgages or trust deeds) to be recorded with the county, making the new loan a lien against your property until it is paid in full. When the documents are recorded, Newmark and/or the escrow agent will let you know that "recording is confirmed." Once recording is confirmed, escrow will disburse funds.
- Payments Due.
Payments are made to loan servicer. As part of your disclosure packet, you will be given instructions on where to make the first payment. Often interest will be prepaid for 30 days or so to give the servicer time to get the loan set-up for collection. Do not wait for your first statement, be sure to send the amount as directed to the company directed so your first payment is not considered late. If you are unsure, ask Newmark.
Real Estate & Construction Hard Money / Private Money Equity Loans - Reno, Sparks & Northern NV
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