Tim: Veristone Mortgage helps people with “outside-the-box” lending that traditional lenders just won’t do. What’s your most popular product right now and why?
Aaron: For our investor clients, our “Fix and Flip” product is by far the most popular. This product offers investors an all-in-one loan program when acquiring, rehabbing and quickly selling a home for a profit. I recently read that nearly 40% of REO’s are being purchased with all cash, and our financing allows these investors to compete with those cash offers.
These loans are extremely easy for us to approve because the primary focus is the property/project. During the underwriting process, we will verify the contractor’s credentials, acquire the contractor’s budget and obtain a fully itemized scope of work to be performed on the property.
Tim: Is house flipping more common with seasoned investors, businesses, or beginners? What are a few things a beginner should do if they want to qualify for financing?
Aaron: There are certainly some large institutional investors in the market, but our primary focus is working with seasoned investors and beginners. Anyone considering their first real estate investment should consult with one of our account executives. The resources and expertise we offer beginners will help ensure they are prepared to make good decisions, and hopefully become a repeat buyer.
Tim: What are some of the reasons someone would want a bridge loan? For what situations are they best suited?
Aaron: In many situations, well-intended, but over-corrective policies are severely hampering the ability of qualified buyers to purchase a home. Our bridge financing offers consumers a short-term financing solution to overcome these hurdles. The most common issues we see are related to income and asset documentation, property condition and/or credit history.
Tim: Is bridge lending becoming more popular?
Aaron: It has definitely become more popular with inventory shortages in the real estate market. Buyers cannot afford to wait for issues to be resolved because sellers have multiple offers on their property. In these situations, buyers turn to us for short-term financing and their traditional lender works with them to refinance them into a long-term financing solution once they meet the qualifications.
Tim: Do you often save home purchases at the last minute because they fell through with a traditional lender? What are the top reasons transactions die toward the end?
Aaron: It’s surprising how frequently consumers need creative financing. I hear from multiple loan officers and real estate agents daily that need our help saving a transaction. The issues usually fall into one or more of these buckets: Debt-To-Income Ratio, Income Documentation, Asset Documentation, Property Condition or Credit History. A common example of income documentation currently are people that have not yet filed their 2014 income taxes, but they need this to be done prior to qualifying for traditional financing. A common example of debt-to-income ratio issues are people that are buying a home and selling their current home. They run into issues when the sale of their current home is closing after they will complete the purchase of their new home. If they cannot extend the closing on their purchase, they often need a creative financing solution. A common example of credit issues are people that had a short sale, bankruptcy or foreclosure in the past and don’t quite meet the required waiting periods with traditional financing.
Tim: How fast can you close a loan?
Aaron: We like to have at least 1 week, but we have closed loans in less than 72 business hours.
Tim: Does your company offer any other alternative financing options?
Aaron: We do have some long-term creative financing for consumers and investors, as well as financing for auction property financing and other unique investor products.
Tim: Any other thoughts or advice on bridge loans, house flipping loans, or any of your other non-standard loan types?
Aaron: Anyone having difficulty qualifying for traditional financing or frustrated by missed real estate opportunities should contact us to see if our creative solutions can help. Our underwriting process is extremely quick, and we usually offer same-day underwriting decision. Even if we can’t offer them financing right now, we can help them get on the right path to homeownership. Click here to contact Aaron.