DUMB ? - Can you get 'pre-approval' from HML? - Posted by Heidi W

Posted by Jenny- Mid Michigan on May 16, 2002 at 21:06:58:

I have the same question. I realize that each specific deal must be analyzed by the lender. But seems a pre-approval letter could open some doors. I also would appreciate input from investors who go the hard money route. Good luck Heidi.

DUMB ? - Can you get ‘pre-approval’ from HML? - Posted by Heidi W

Posted by Heidi W on May 16, 2002 at 17:57:01:

Hi All,

Can one get a ‘pre-approval’ letter from a Hard Money Lender? Does such an animal exist?

I’m trying to look at (and make offers on) undervalued / distressed properties in the MLS, but all of the Realtor’s ask the same annoying question, “ARE YOU PRE-APPROVED?”

I’ve been saying - “No, I’ve got some friends that are going to go ‘in with me’ when I find the right deal” - but they then say…“Well in this market you’ve got to have all your ducks-in-a-row, or forget about it.”

I finally found a Realtor that specializes in a part of town that’s ‘on-the-edge.’ Apparently - the offers don’t come in double-digits in the first 4 hours like the more desireable areas. Perhaps he’d be willing to present offers without seeing the darn PRE-APPROVAL letter.

Anyhow - back to the question. If I found a deal worth persuing - my plan was to go hard money for the loan. My impression was that you go to the HML “after” you find the deal - and I’m assuming that a pre-approval letter would be putting the cart before the horse…but I may be wrong???

Thanks for any input or clarification,
Heidi

Re: DUMB ? - Can you get ‘pre-approval’ from HML? - Posted by Carey_PA

Posted by Carey_PA on May 17, 2002 at 21:30:03:

Heidi,

Yes, you can get a pre-approval letter from your hard money lender…just ask them!

Grant it, they are probably gonna run your credit and all of that stuff, but when you come across a deal that you’re interested in, just give 'em a call and ask them to send you a pre-approval letter, etc.

talk to your HML in your area and see what they have to say!

CAREY

Re: DUMB ? - Can you get ‘pre-approval’ from HML? - Posted by RudyB

Posted by RudyB on May 17, 2002 at 08:59:54:

Statewide Capital LLC does have a process where you do a preliminary application, then as you find properties they look at them on an individual basis, but as long as you keep within certain parameters you’re pretty much assured of being approved. They only do business in certain states, however (I don’t have a list with me).

I’m sure somebody else must operate in that way…

Everyone is approved!! but is the property?? - Posted by HousingSolutions

Posted by HousingSolutions on May 17, 2002 at 08:14:05:

I don’t see how it would be possible to get such a letter and here is why…
The “traditional” preapproval letter from a lender is basing how much you can buy based upon your Credit History. This is what you make subtract How much you now owe = how much extra debt you can absorb. Now on hard money where credit truly is irrelevent and the property itself is the sole criteria of whether you can get the loan would work completely differently. Now you want a preapproval letter stating that you are guaranteed a loan based on the LTV of a particular piece of real estate although you haven’t found a house yet nor the hard money lender hasn’t seen the numbers yet. Its like putting the cart before the horse. I would say any hard money lender could put on paper something like this “I will loan to John(Jane) Doe 65% on the FMV on any qualifying property.” I just don’t see where that is really going to help that much with a Realtor since it would never show a specific $$$$$$ figure.

Re: DUMB ? - Can you get ‘pre-approval’ from HML? - Posted by Sean

Posted by Sean on May 16, 2002 at 22:04:42:

HML I have worked with in my area, have given me Pre Approval letters when asked. Nice thing is one pre-approval letter is good for 3 months.

As for “having ducks in row” personally if you are in a market that is that “HOT” I would expand my radius rather than buy marginal properties. Secondly, keep in mind most Agents don’t have a clue about creative financing etc… Especially in ultra hot markets, they don’t need to, some of the WORST agents I have ever had to deal with worked in the hotest markets… some of the best worked in more modest/moderate areas. Have you tried to find some FSBO properties, and dodge agents/brokers all together? Have you looked at properties in need of rehabs… in super hot markets I have talked to many who have been able to find and capitalize on these greatly.

Have you looked into REO’s etc in this “hot” market? Or VA/FHA repos? Many of these properties are not shopped well, and can be found at reasonable prices, and with some rehab can provide instant equity.

Best of luck.