5 Reasons Mortgage Brokers Should Partner with Hard Money Lenders

A successful mortgage broker understands the powerful impact that networking has upon their business. It is in the Brokers hand_Shakebest interest to develop strong relationships with the RIGHT people.

By doing so, you will benefit yourself while simultaneously becoming a more valuable resource to your clients. Here are 5 reasons why you need to develop a relationship with several hard money lenders.

  1. Easy commissions on loans that close fast and require almost no work on your part.
  1. Instead of having to turn-down a prospect you are actually finding them a solution thus creating future business for yourself.
  1. Many private money loans are paid off by obtaining a less expensive agency loan at some point in the future thus giving you an opportunity for additional business.
  1. Okay, those are the obvious advantages, consider the following. Private lenders are spending all of their resources building and nurturing a client base of high net worth people that are out buying investment real estate. Those people also have plenty of “traditional” borrowing needs as well. And, they are out there selling real estate and meeting plenty of buyers that could be referred to YOU.
  1. Private Lenders are also out there working with realtors on closing purchase transactions. YOU should be getting some of those purchase loan referrals.

The bottom line is that working with private money lenders is not just about the commissions earned on the hard money loans, but also about growing YOUR business. Ask for those REFERRALS. Be the broker that clients can depend on and ALWAYS have the solution they are looking for.

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Hard Money Basics

Hard money lenders are lending companies, or individuals, offering a specialized type of collateral backed loan. They tend to lend short-term capital (also called bridge loans) that provide funding and or cash, based on the value of the collateral. Hard money lenders can and will utilize all types of collateral- cars, boats, land, airplanes, hard assets, paintings, etc. to complete the loan. For the purposes of this page, will narrow to mortgage or home loans. Hard money lenders tend to focus on the value of the collateral rather than the borrower’s ability to repay, FICA score, debt to income balance; instead of based on their own personal income or other assets, as is common with traditional lenders. Hard money lenders typically charge much higher interest rates than banks because they fund deals that do not conform to bank standards such as verification of borrower’s income, assets, or credit score.

Hard money lenders will offer a range of requirements on how much they will lend (loan to value), what types of real estate they will lend on (commercial, residential, multi-family, land) and minimum and maximum loan sizes. Hard money lenders that lend on residential property must be licensed through their state regulatory agency and through the National Mortgage Licensing System (NMLS). Borrowers should verify the lenders license through the NMLS in order to prevent problems at closing, as many states require the lender’s license number to be listed on the loan documents. Not having the license number on the loan documents could prevent the loan from closing.

 

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