What do lenders usually want to see first?

Question

From your experience, what information helps move a deal forward fastest when seeking funding? Numbers, scope of work, or exit plan?

Patrick Roberts · Answer

What helps a car start first? Keys, or gas? You need both. If you dont have everything thats needed, you wont get anywhere

Mike Klarman · Answer

There's a few things.  First, have your ducks in a row.  That means you come in with:

1) Contract in the LLC name2) App filled out if necessary3) Who your title contact is4) SOW if a bridge loan5) Your ID6) The credit auth to run your credit7) Bank statements that show cash to close plus a cushion

Then, you are asking what will make a lender work with someone who has little to no experience.  So, of course money talks.  If you need 30k to close, show 60k.  You have 2x as much.  That matters.  If you have no experience, have 720+ credit and no lates on your b.g. report/credit report

But all this knowledge is a double edged sword.  I learned the hard way about the fix n flip and I watched clients learn the hard way.  Not that it CAN'T work, but there's lots of moving parts.

And there is one thing to note.  Lots of deep pocket individuals in this industry, in every market, and they are playing the long game not the short game.  So what does that mean?  It means they can overpay.  Getting money back in a refi means nothing to them.  If they leave 20k in, so be it, over time they will win.

If you are in the game for the short term gains, all the things that do not matter to the long term, deep pocketed investor matter you you greatly:

The price you buy at: If you do not buy under market value, you are already sinking

A perfect rehab: The long term guy can have a long drawn out rehab, you need it done perfect, on budget, to comps, on time.  THAT does not happen. Ever.

The short term market shifts, the monthly inventory, mortgage rates, cost of debt, economy health, public spending - THEY all matter to the short term investor.

Stacy Raskin · Answer

Talking to a lender or mortgage broker, they will usually want to know what you think your credit score is. If a DSCR loan, they will want to see you have the cash for down payment and closing costs or if a refinance, the equity to make the deal work. If a debt to income (DTI) / conventional loan, the mortgage professional will want to know more about your income and whether a W2 employee or self employed as it is calculated differently. If a fix and flip loan, they will want to see scope of work and budget. So it will vary based on the loan products and the items mentioned are the high level overview that are needed to get the conversation started, not a catch all for everything is needed or this post would be a small book : ) Happy to connect to discuss further.

Brittany Minocchi · Answer

Depends on what type of funding you're looking for - conventional, DSCR, fix and flip...each will have different requirements.

Jill F. · Answer

Hi Melinda, When we talk to new lenders (we use small regional banks), they usually first want us to a complete their personal financial statement form and we also usually take a copy of our business plan.

Julien Hill · Answer

Hey Melinda, this is a great questionTypically having all of the information up front allows a lender to get most granular on pricing from Day 1. Being transparent is the name of the game, as it can avoid underwriting issues down the road.For DSCR scenario in particular, lenders would look for the below data points to confirm property adheres to seasoning requirements (usually 90 days) as well as debt service ratio

• Borrower Name
• Borrower FICO Score
• Property Address
• # of Units
• Purchase Price
• Purchase Date
• Estimated As-Is Value
• Annual Taxes
• Annual Insurance
• Annual HOA (If applicable)
• Current Rent per unit
• Market Rent per unit
• Loan Amount Request
• Existing Mortgage/Lien Payoffs
• Any pricing guidance that the client has in particular (Prepayment Request, Fully Amortizing vs I/O, Interest Rate request)

What do lenders usually want to see first?

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