There are a lot of reasons to close a real estate purchase as quickly as possible. When investors can get to the closing table quickly, they can appease a seller who wants to get a property off their hands as quickly as possible. At the same time, there’s fewer chances of something “going wrong” in the seller’s’ life that may lead to a problem in the sale.
Quick real estate closing in the investor world can also help investors to access lower mortgage rates. This is because rates worsen as the number of days required to close the loan increase. When borrowers can close a deal in fewer than 30 days, they should be able to benefit from a better interest rate.
Often, in the world of real estate lending, the biggest delays with property purchases occur during the underwriting period. The good news is that with a little bit of prep work and the right support, investors can help to make the process run as smoothly and quickly as possible.
Getting Your Documentation in Order
There are various steps that a real-estate investor will need to take before they can get a mortgage approved. Unless they have hard money to pay for a property, then borrowers will need to give their lender all the information they need to determine whether they’re a risk, or a safe bet. For instance, they’ll need documents that indicate how the borrower is going to be able to afford the mortgage, alongside information about credit ratings.
Investors should make sure that they have all the signed loan documents you need in place before approaching the underwriter’s table and take the time to ensure that all their permits are ready to go too. The more prepared they are with the right literature, the more likely it is that they’ll be able to speed the closing process along.
The more time an investor spends in world of real estate lending, the more familiar they’ll become with the kind of documents they need to provide to get their loan approved. This will mean that they can prepare files in advance.
Demonstrate Your Exit Strategy
Another great way to improve the chances of faster real estate closing processes, is for borrowers to make sure that they have a pre-established exit strategy in place. Some real estate lending companies are cautious about working with investors. This means that they need to see evidence that the investor will be able to pay off the loan that they take out before they’re willing to hand over the cash.
Most experienced investors will work with a bridge lending platform like Sharestates to quickly fund their project and then refinance with a traditional lender after a 6-24 month period.
Often, an exit strategy will depend on the borrower’s position with other assets, their retirement plan, and your income. However, it’s worth noting that some banks and lenders will refuse to accept the strategy if it doesn’t meet their policy, or it isn’t considered “realistic”. Professional real estate lending companies may be able to work with an investor to help them compile an exit strategy – but this could mean that closing the loan takes longer.