September 17, 2019
In Part 1 of our series, we talked about the origination process, but that is just the first step in acquiring a hard money loan. Today we will discuss what you can expect in the second part of originating a loan- the underwriting process.
The Loan Underwriting Process
Underwriting is an essential part of the hard money lending process. During this step, the lender assesses risk and makes sure the borrower meets all the requirements for loan approval. As a new investor, the underwriting process may intimidate you. However, there are simple steps you can take to ensure it goes as smoothly as possible.
What You Should Know
When working with a hard money underwriter, it’s important to compile all the necessary documents as early as possible.
Necessary forms may include:
- Borrowing entities documents
- Tax Return transcripts
- Driver’s license
- Credit Report
- Purchase contract
- Rehab Budget
The hard money underwriter will check over all of these documents to ensure they are in proper order so you can seamlessly move on to the next step of the process.
The Step-By-Step Process
Some of the steps the underwriter will take during the hard money loan process to help approve the final loan terms involve:
- Ordering an appraisal in order to assess the current and future value of the property
- Ordering a feasibility study in order to assess if the scope of work and rehab budget are inline
- Performing a title search
- Ensuring that all conditions are met
When it comes to certain details, such as the home appraisal, the hard money underwriter makes sure you will be lent the appropriate amount of money. In addition to getting the money for the purchase of the property, you will typically be able to get most if not all of the money for the rehab or construction needed to complete the home.
Once, everything has been verified and the investor has submit payment for the appraisal and any other upfront costs , the final term sheet, which outlines the terms and conditions of the hard money loan, will be approved as long as everything has been executed correctly.
What Makes BMC Different From Other Hard Money Lenders
There are many reasons Bay Mountain Capital is different from other hard money lenders. At BMC, we remain transparent throughout the process, notifying borrowers of their status every step of the way. BMC lets borrowers know upfront the costs associated with the underwriting process so they do not have to worry about any unexpected fees. When working with a hard money underwriter at BMC, you’ll also find our team works to make the process as smooth and simple as possible for everyone involved.
Our transparency is why so many investors choose to work with BMC for their hard money loans. If you’d like to learn more, you can contact us today to get started on your hard money loan application.
Stay tuned for the final part of our Originations series: Closings.
About Bay Mountain Capital:
Bay Mountain Capital has been in business for more than a decade, closing approximately 2,000 loans. We specialize in financing all types of residential and commercial property investments throughout Texas and Georgia. Using common sense and value-added approach, we strive to incorporate these principles into our underwriting and closing processes.
As a direct lender, Bay Mountain Capital can close a loan within one day after receiving a complete file and clear title. The process generally takes two weeks for a residential loan but can be accelerated where circumstances require it.
We are primarily an asset-based lender, which means that qualification requirements are limited. Our rates and fees are among the lowest in the industry.