With the Holidays around the corner and increasing tax burdens coming our way, it is a good time for Mortgage Brokers to contemplate ways to earn additional income. A proven method to increase income is to monetize existing leads. Turn a “No” into a “Yes”. Take a Bank (conventional lender) turndown and convert that lead into a Hard Money Loan. Here are 4 ways to Make Money When the Bank Said No:
1. When the Bank said that they could not close the loan fast enough: Short Sale timelines dictate fast closings. Hard Money loans can be acquired in as little as 5-7 days.
• Speed to Close: Purchase cash offers are tough to compete against. Use a Hard Money Loan Pre-Approval letter with a fast close offer to secure that offer acceptance.
2. When the Bank’s Underwriting Rules Engine denied the loan:
• Seasoning: Recently, on a hard money funded loan, a borrower left his job for a new better opportunity job. The bank at the last minute denied the loan due to lack of seasoning in the new job. Hard Money does not typically require down payment or income seasoning.
• Credit Issue: Credit Scores impacted by foreclosures, short sales, and mortgage late payments are typically ok with Hard Money loans that rely on the equity in the property.
• Documentation: Self Employed borrowers have trouble showing Tax Return income. High net worth individuals don’t want to go through the hassle of documenting their entire financial lives. These individuals can qualify for Hard Money loans that have limited documentation requirements.
3. When the Bank could not provide a Short Term Loan: Bridge financing with a balloon payment on non-owner occupied properties sometimes makes more sense than a fully amortized 30 year loan. Consider a Bridge Hard Money Loan when:
• Equity: 35% down payment or equity in the existing or repaired property
• Ability to Pay: The borrower has the ability to pay the monthly loan payments
• Exit Strategy: The exit of the loan will be within the first year or few years either through a conventional refinance or a sale of the property
4. When the Bank said No because the occupancy or loan purpose is unsuitable:
• Occupancy: Many Bank loans including the popular FHA 203k loan require Owner Occupancy. Real Estate Investors who will not live in the property may qualify for and find a hard money loan to be a better financing fit.
• Loan Purpose: Many bank loans require a consumer purpose. Hard Money lenders specialize in Residential properties being purchased or refinanced for a business purpose.
Learn to maximize income from lead generation and turn a ‘No’ into a “Yes”. How have you made money from a Hard Money Loan? We would like to know. Please submit a post on our Mortgage Vintage, Inc. Facebook Page or our LinkedIn Company page. If you enjoy discussions like this, please sign up for our Linked in Group called Southern California Trust Deed Investment Group.