If Realtors could have their prayers answered… it would be that every Buyer would be a cash buyer. Escrows would close faster, there would be a lot less work for already overworked agents and no escrow would ever get canceled due to the Buyer not able to get financing.
In realty most Buyers need financing and in most situations are able to obtain the standard Fannie Mae loan. In today’s world there are many instances where a homeowner makes the big decision to sell their home, realizes a large amount of money, makes an offer to buy another property and then reality hits.
The Buyers receive the unfortunate news that for some reason something in their loan application is preventing them from obtaining loan approval to buy their new home. The Sellers can’t sell, the Buyers can’t buy and you the Realtor didn’t receive your commission. This situation is a sure loss to everyone involved.
In many situations like this Alternative Lending just might be the answer to everyone’s problem. The qualifying requirements are easier and there are many programs available to accommodate just about every Buyer’s specific situation, whether it be negative credit, difficulty proving income or the subject property not being up to institutional standards.
Alternative Lending can be broken down into “3” basic categories:
For those Buyers that are just “outside” the lending requirements of the major banks and institutional lenders.
For Buyers who have additional credit and income challenges.
Most Alternative Lending programs require a 20%-25% down payment and if the Buyer has the funds then many of the income and credit impediments of “A” Paper lenders are eliminated, the Buyer can get approved for financing and everyone wins.
Some of the situations where Alternative Lending can help you close more escrows are:
1. Buyers who have lower FICO Scores
Bankruptcy…Loan approval right after bankruptcy
Foreclosure…No need to wait many years to get financing
Short Sale…Not considered a foreclosure
2. Buyers whose Tax returns don’t tell the whole income story.
Bank statements…12-24 month bank statements to prove income
Stated Income…Available in certain situations
3. Condominiums complexes that are not FNMA/FHLMC approved
No need to obtain a FNMA condo certificate
4. Down payment documentation
Less requirements in sourcing the Buyer’s down payment
Additional benefits available with Private Equity are the ability to finance a property that has substantial deferred maintenance. This can help with a client that is an active Fix & Flip Buyer or for a client that is interested in venturing out and buying a property that needs a little more than the basic TLC.
The next time you have a Buyer who is having a problem getting loan approval take a few minutes to look into how Alternative Lending can provide the lifeline necessary to close that escrow.