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How to Communicate With Hard Money Lenders
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For borrowers and mortgage brokers, the chances of needing to deal with private lenders (hard
money lenders) at some point during your search for a loan are becoming greater by the day.
Unfortunately, outside of real estate professionals that deal with hard money lenders on a regular
basis, very few individuals are skilled at communicating and selling these lenders on their credit-
worthiness. The result is a bag of mixed responses from private lenders and a lot of frustration on
the part of both mortgage brokers and their clients.
So why is it so difficult to communicate with hard money lenders? They're a tricky bunch because
almost none of them are the same. What works for one lender won't necessarily work for another,
and they interpret information in a myriad of different ways. Going around in circles with private
lenders can make your head spin and eventually make you think that getting approved for a hard
money loan is more difficult than finding a needle in a haystack. But what if you could greatly
increase the odds that your loan request will not only get a favorable look from almost all hard
money lenders but also increase your overall odds of getting an approval?
There's a phrase that floats around the private lending arena: "character counts." The reference is
to the character of a borrower, of course, but what constitutes character is defined a number of
different ways. For some lenders it means knowledge and experience. Does the borrower seem to
have the know-how to move their project to fruition? For other lenders it means mortgage history.
Has the borrower ever chosen to walk away from a loan? And for others it almost literally means
character. Does the borrower seem to be upstanding, moral and willing to accept responsibility?
We can't discern what character is going to mean to every lender, and we can't change who the
borrower is. However, there's an aspect to the term "character" that seems to be nearly universal
in the world of hard money loans that you absolutely can control. You have the power to determine
how private lenders are going to perceive you or your borrower, whether they consider you to be
"a hassle to deal with," or if your files come across with promise and potential. The trick is to know
how to communicate with private lenders, and while some of these tips may seem trivial, not
accounting for them can be the difference between an approval and a rejection.
1. Be Clear With Your Information
Most private lenders are going to require some sort of executive summary from you, which means
that you're going to have to do some amount of explaining as to why you or your client deserves a
loan and how the loan structure will provide a win-win scenario for borrower and lender. Not
providing information that's clear and concise can be an absolute deal breaker, especially when
the deal is more complicated, as many commercial scenarios are. Information that isn't specific, is
ambiguous, or is directly in conflict with other information that you're presenting causes a lender to
have to ask questions (assuming they don't just turn you down). When a lender has to ask
2. questions to decipher your information it takes up their time. The more time they have to take just
to understand your information the less time they have for everything else. The less time they
have for everything else the less productive they are. So the result is that they're more likely to
brush over your loan request or just reject it all together, assuming that it probably wasn't worth
their time in the first place.
2. Check Your Facts
No matter how busy you are, you have to find time to completely understand the loan request that
you're submitting to a hard money lender. If your file gets reviewed and you're asked follow up
questions you're going to be expected to know the answer to anything basic. If you don't know the
answer already your credibility is going to take a hit. The lender is either going to perceive you to
be a "paper pusher" or a disinterested participant. You may not have any real motivation to see
the deal through other than for the prospect of a commission. The result will be a whimsical
second look at your information that will probably result in a rejection. After all, why should the
lender spend their time if it clearly wasn't worth yours? Lenders accept files from brokers because
they provide a valuable service: an initial screening of borrowers' files that categorizes them as
either having potential to be funded or not worth the time. Make sure that you don't forget to do
your job, because nobody is going to do it for you in this market.
3. Package and Label
There's a big difference between handing someone a stack of papers and asking them to read
through it and handing them a tightly bound file with labeled tabs that allow them to easily access
the information that they're interested in. If you tend to do the former, you're greatly decreasing
your chances of success with private lenders. Nobody wants to sort through information, they want
to have it presented to them. Consistently packaging and labeling your information in a
professional manner goes a long way in determining how you, your borrower and your loan
request are received.
4. Don't Info Dump
Private lenders aren't banks, so the information that they require you to submit is going to change
from firm to firm. While many basic items may be similar, every lender will have a different flavor
that they like. If you simply fire around the same information to a list of private lenders, most of
them will receive it and immediately think that you didn't both to take the time to look at their loan
submission criteria. They'll wonder if you're lazy, if you're throwing things around hoping that they'll
stick somewhere, or if you just weren't intelligent enough to understand what information it was
that they typically request. What's worse is that all of that unnecessary or improperly presented
information will just get in the way of the good information and it will take a lot longer for the lender
to get through it, again taking more of their time. If their review team isn't in a good mood that day
they may never even get to the good information and you'll receive a rejection before your loan
request ever had a chance.
5. For Goodness Sake, Type It
Deals are overlooked, passed on, put on the bottom of the pile and rejected by private lenders
every day simply because they don't want to bother to try to read borrowers' or brokers'
3. handwriting. We're in the year 2011 and Americans are starting to talk about living on Mars by the
year 2030 - it's about time to learn how to type and use the computer. Not all mortgage technology
is necessary, but simple word processing is. If you provide handwritten information to a private
lender it's very likely that they're not going to take you seriously. It's a harsh reality, but it's time to
make the change if you haven't already.
Doing the little things doesn't ever increase the quality of your loan request, but it improves a
lender's perception of you. When they feel like you're worth their time you're not only more likely to
get the attention that you deserve, but you're also more likely to have lenders help you find
solutions. When hard money lenders consider you to be a straightforward, reasonable, organized
and trustworthy person they'll do their best to find a way to get you funded (assuming there is
one). Becoming one of the best at communicating with hard money lenders can literally transform
your ability to get loans funded. Take the time, do the work, and the results will come.
Chris Gleason is the Managing Director of MMG Capital, a nationwide hard money lender. MMG
Capital and its partners have over 50 years of combined real estate, finance, and lending
experience and handle all of their transactions with utmost integrity and complete transparency.
More information about MMG Capital can be found on our website:
http://mmgcapital.wordpress.com
Article Source:
http://EzineArticles.com/?expert=Christopher_Thomas_Gleason
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Check out the link below for more resources:
http://hardmoney.toufangle.com
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