I have talked to 3 HML’s in the last week, and they all have stiffed me! I need someone to explain to me how the process works, but it’s like they don’t want to tell me everything >:( Here is my situation:
Just started REI LLC after getting laid off
As stated above, no income except fpr my wife ($30000)
Credit 694-701
Available cash $35000
OK, now that that is out of the way…I need to buy a property to flip ASAP. We have read all the book and consider ourselves well educated in REI. I just don’t know how to deal w/HML’s!! What is the step by step process? Let’s say I found a nice property for 85K. My RE agent says it has an ARV of 130K. I want to run as fast as I can to get funding because there are 2 other investors druling over the same property. What do I need to get this done QUICK? Will the RE agent comp’s work for proof of a good ARV or do they need an appraisal? How long does HML’s take to close? Can I work w/out of state HML’S?
How do you get pre-approved with an HML when bidding on forclosures? I’m sorry about all the dang questions but I’m fed-up w/these guys not doing there jobs. This site is a wealth of information, keep up the good work.
PS. I only assume I need an HML because of my lack of income, am I wrong?
My HML met me at the property and explained in detail the ins and outs of the process. Maybe I have a great one or you have 3 horrible ones.
You will need an appraisal which takes time and makes working pre-foreclosures a bit difficult especially if you plan on bidding at the steps. I had one HML once that would show up and bid for me and bring the funds but wanted $1000 upfront non- refundable. Hard to gamble that grand unless you know you will be the only bidder.
The usual steps are HML wants to see the contract to make sure you have a signed contract. At this time too they want a write up of the repairs to be done and an estimate of the costs. They also ask how much you are going to put into the deal and usually 5 to 10 % if enough. Mine just wanted to be assured that I could cover the payments. You may be able to use some of your cash for that and not even be hassled about a job and no income. Your credit is more than enough if they even ask. If they feel comfortable with you and they project they will order the appraisal and inspection and get you to pay for both up front and at the same time will give you a truth in lending agreement that spells out the costs to do the loan. Generally 5 points and 14% is the norm or a straight 18%. They also want a copy of the title report asap and you should get this too before spending the money for the appraisal and inspection. If the appraisal and inspections go OK then they will order the paper work and schedule the closing. The inspection is to make sure that the estimates you the work are in line with the estimates you provided. On my residential deals the appraiser also does the inspections.
Once you have done a few they get easier and almost automatic. Hope this helps.
Help? That’s great! Do you use a local HML or internet? It sound like you do if they met you at the property. The guys I was,WAS, dealing with was internet based. And yes, they were horrible! I got the feeling they were too comfortable. Why do they need to impress anyone?, you know? Is there any negotiating w/these guyes?; ie 2 points and 16%? Not that I’m going to do that at this time but would like to know for when I am an asset to them. Is it possible to get I/O loans from an HML? Thanks again.
The first one I used is local to Austin. He now hires an inspector to meet me at the property. Another is a member of the forum and is local for Dallas, Houston, Austin and now Corpus Christi if we do the deal they have in front of them. I have not done business with an internet group yet. The more someone toots their own horn the more turned off I get personally. Sometimes they are all glitz and glamour and no money. Hard to tell until you waste time and money. I have not found any willing to shave the fees or rates. Most are brokers and the fee is theirs and the rate is the investors. The costs are cheap if you have a great deal and will make marginal deals losers. All my guys do interest only anyway. Who cares as it is short term rehab and not a cash flow loan.
Oh, by the way… Is it normal to have a $400 application fee (non-refundable)for one of those internet HML’s? That’s crazy! If I was certin they would approve me I would not fret about it but, they might not with my lack of job and all. These guys REALLY like money!
Hello, Tedjr is basically on the right track with HML. As for $400 on the internet, save your money. Your right, there is no guarantee that you will get the loan. As a matter of fact, no one can guarantee that you will get the loan. Not even me. It is the decision of the lender to loan. It sounds like Tedjr has used someone I know (dhlc), am I correct? The information here is great. Hope you find your HML.
Thankyou