How much weight does proof of funds from a HML carry?

5 Replies

My partner and I are looking at both potential flips and BRRRR’s. We have private lenders who would be willing to lend “for the right deal” but none who are willing to approve the deal until our offer has been accepted. If none of our lenders approve a deal we make, we’ll go the traditional hard money route. Because of that, I see no ethical problem with giving proof of funds from a HML (they will be our option unless we get a better rate) but am not sure if it will be enough when submitting an offer. Is proof of funds from a HML enough to have our offer entertained?

A POF from a HML is Not a POF from from You for a cash offer.....it is a loan "preapproval", assuming you get that also from your HML. How much it carries depends on the knowledge of the seller.....for an educated seller it means very little.....it means you may get the loan if it meets the HML's criteria (an unknown), if you have the additional cash needed, blah blah blah.

@Tyler Lee are you trying to buy as a cash offer or contingent upon financing? If contingent upon financing, the HML pre approval should be adequate. I've used them before and have never been questioned.

@Jason D. this would be continent upon financing. The plan is to use a HML unless our private lenders offer a better rate.

We’re on the lookout for our first deal, so the specifics of the process is new to us. Do we simply say “contingent upon financing” in our offer and submit the pof from the lender? I just fear we won’t get through the door of many sellers, especially if we try to buy a foreclosure from a bank.

@Tyler Lee you just write it up like any other offer. You'll have contingencies for inspection, financing, and whatever else you want, and sent the POF from the lender, just like if you were submitting an offer from a traditional bank. It's not going to be as attractive as an all cash offer, but it's better to be safe than attractive....

The main point to make to the seller is that the investor funding you are using will enable a much faster close (10 days to two weeks) than conventional financing would be - less exposure for them since the property will not be tied up longer.