Hard Money Loans: A Real Estate Agent’s Perspective
I am a Managing Broker with more than 11 years of real estate experience. I am here to simply state that the new mortgage disclosures that went into effect this year are a deal killer.
In the real estate industry, we are all looking for simplicity. We want something that helps us make sure that a quick closing is a reality. Long gone are the days where a clean offer comes in and can actually close in 45 to 60 days. Buyers can have 780 credit scores, home inspections can come back perfect and yet we still have to ask for extensions. Why? The banks are always holding something up. Suddenly they will require obscure pieces of paperwork that have absolutely nothing to do with the Buyers’ closing on their dream homes, underwriters being too busy to process files or loan paperwork simply not being processed in a timely manner.
The bottom line is that these inefficiencies often leave Buyers with a house they just sold and homeless for a week or more at a time. The costs of living in a hotel, renting a moving truck and waiting can be devastating. Much less, this always falls squarely on the shoulders of real estate agents.
As agents, our hands our tied, as we cannot put pressure on the banks to expedite loans. The lenders have had the files for 45 to 60 days, sometimes even longer, yet our Buyers are sitting out in the cold, just waiting.
This hardly seems fair. The new regulations were supposed to help expedite and simplify loan procedures. Instead, we have clients that are waiting, which can be an especially dangerous game with short sales or foreclosures. As we all know, it is way to risky to roll the dice on the aforementioned types of deals. Waiting on a lender can easily mean a foreclosure could go back on the market. Where does that leave our clients? Blaming us as real estate agent, because they expect us to magically work wonders and make everything happen.
In difficult circumstances, hard money loans come into play. If a Buyer wants a fast close on a house, it may be best to temporarily choose a direct lender or hard money lender. These types of lenders can close loans within days; just after inspection periods are waived.
Yes, the interest rates are higher, but after the transaction closes, Buyers can easily go to a bank and apply for a conventional loan, without the stress, financial worry and heartache associated with waiting 45 to 60 days to find out that their lenders cost them their future homes.
While the situation may not be ideal or traditional, there is nothing traditional about today’s real estate or loan markets these days. For buyers to get what they want, real estate agents need to think outside the box.