Imagine you are a real estate investor preparing to acquire a new property. It is Friday morning, and you are scheduled to close on Monday. Unfortunately, your bank calls to inform you they are backing out of a deal. What are your options? Could a hard money lender save the deal in just one business day?
As impossible as it sounds, hard money lenders (actiumlending.com/hard-money-loans) can move that quickly. Actium Lending, a leader in Utah hard money loans, has helped clients out with single-day approval and funding in emergency circumstances. So while it is not the norm, closing in one day is doable. But how do they do it?
Before revealing hard money’s secrets, it is important to note that Actium Lending is very particular about the deals they make. They do not recklessly lend to anyone who needs money. They are not predatory lenders who indiscriminately lend with the goal of taking properties from borrowers. Everything is on the up and up.
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Direct Capital Control
The most important consideration here is the fact that hard money lenders exercise direct capital control. They fund loans using private capital reserves managed locally. So when an emergency funding scenario arises, the primary decision makers are also the fund managers. They do not have to go through loan committees or hand off applications to a multi-layered system.
Traditional lenders don’t exercise direct control. Loan applications originate with a local loan officer. From there, an application goes through several layers before reaching an approval committee. So many hands in the pot create plenty of opportunities for a loan application to get stuck.
In-House or Local Asset Valuation
Another slowdown in conventional financing is arranging property valuation. Banks have to contact local contractors and schedule an appraisal. The entire process can take weeks or months. But a hard money lender like Actium Lending either handles valuations in-house or works with a trusted local contractor ready at a moment’s notice. Rather than scheduling a valuation for weeks down the road, a hard money lender can usually get it done the same day.
Minimal Documentation Requirements
The speed hard money lenders are known for is aided by minimal documentation requirements. Remember that banks approve and underwrite loans based on income metrics and borrower creditworthiness. Hard money lenders base their approvals on asset value. They don’t require a lot of extra documentation. As long as a borrower provides the right property information and a solid exit plan along with his loan application, a lender won’t need much more – if anything at all.
Immediate Title and Escrow
Even if a traditional bank could complete the underwriting process in a single business day, there is one more challenge to pulling off a 24-hour closing: managing title transfer and escrow execution. The reality is that a lender cannot transfer funds until title insurance is clear and escrow instructions are prepared.
To ensure single-day closings are possible when needed, hard money lenders develop close working relationships with proactive local title companies. When an urgent transaction hits the lender’s desk, title officers immediately give it priority. They collaborate with lenders to make sure the work is done as quickly as possible.
There When You Need It
Single-day application-to-funding transactions are not the norm in hard money, but lenders like Actium can pull them off when emergencies arise. As a real estate investor in Utah, it is nice to know that the option is there if you need it. Should your bank ever bail in the final hours before closing, a Utah hard money loan could very well save the deal.
