Nowadays, most real estate investors rely on a steady flow of private money. They do not want to depend on traditional institutions like banks’ lengthy and cumbersome loan process.
However, private lenders are known for making the loan process easy. In our previous articles, we discussed how to find and convince a private money lender. But the big question arises about how to prepare yourself to get private money loans Greenville, SC.
The only answer is to be ready with all the documentation. Want to know what are the documentations needed to get a private money loan? I’m sure you do. Continue reading the article to know the essential aspect of a private lender loan.
Documentations for Private Money Loan
Without any doubt, documentations are of the utmost importance for a private money loan. However, many real estate investors are still unaware of the paperwork involved in getting a private lending loan.
Previously, the borrower had to sign a written promise paper to repay the loan, and the documentation was used as collateral for the lender. However, they also need an appraisal from an outside party, a geology inspection, a property inspection report, and your financial record.
The majority decision process of the private commercial lenders Orlando is an in-person inspection of the real estate property. Below are some standard documents associated with getting private money loans.
1. Purchase & Sale Agreement
It is the document received after mutual acceptance of an offer, including the final sale price and all terms of the purchase. Some more documents included in the agreement are the closing date, title condition and earnest money details.
2. Letter of Intent
It acknowledges that all the parties are on the same page. Also, it is a legal binding between two parties that serves as a preventive measure for miscommunication.
3. Title Insurance
It is a preventative measure that protects you as a buyer from a person that challenges the ownership of a real estate property.
4. Preliminary Title Report
In this process, the title company checks the home’s title to look for any problems after the buyer and the lender agree on the same terms. Then the result of this process is listed on a preliminary title report. It also listed the history of ownership of a home.
5. Personal Guarantee
As a borrower, if you want to stay in the game, you must be ready with your personal guarantee. In other words, you have to put your own assets. The only drawback is that you can’t pay back your loan.
6. Proof of funds
It will show your intent towards the private money loan. Also, it will assure the lenders that you have enough funds to complete a transaction. To give proof of your funds, you have to show your account statement, bank statement, or other legal forms.
So here are the documents you need to get a private money loan. If you’re not able to fully fund your real estate deal with your available cash or traditional loans, private money is a great way to supplement your income.
All you have to do is to prepare yourself to present all the documents shown above in the article to display the viability of your real estate deal.