By Will Heaton
An underwriter can mean many things depending on the industry, but since we are all here for real estate we can assume that we are talking about lending on properties. A typical bank will have underwriting guidelines that are heavily dependent on the borrower, their credit and job histories and ability to pay back the loan. The property matters only to an extent that the bank will check the appraisal and trust the given fair market value (PMV) of the property from the appraiser and his or her opinion of value.
Conventional banks also lend at very high loan to values (LTV) and with government-sponsored programs, like FHA and VA loans the borrower can get into their personal residence with 3.5% or even zero dollars out of pocket. With these types of loans also come a whole different set of underwriting guidelines with new rules and regulations coming online every day all adding time to the underwriting process for traditional lenders. These loan process hurdles is the main reason sellers, particularly for homes that may need some work, prefer to work with cash buyers or hard money lenders that can fund in two days with none of these extra rules and regulations that delay closing
A hard money lender like Intrust Funding cares more about the property and its potential worth than the borrower's financial history or the opinion of some appraiser. The hard money underwriter does not have all of the government stipulations, varying rules for different loan programs, no debt to income (DTI) ratios to worry about, appraisals to review, etc. Their main focus is on the property. The desktop underwrites a lot of deals and understand the financial aspects of the loan and most importantly valuation methods better than any other loan underwriter and most professionals in real estate. Given that most of the homes that are underwritten need some rehab work to add value the hard money underwriter also have a solid understanding of construction costs and what a property needs to obtain the highest selling price when it is sold. Unlike at the big banks where you won't ever be able to speak with the loan underwriter about your purchase, our loan underwriter is not only accessible, but he is more than willing to look at your project and give you an after repair value (ARV). This is just part of the elevated service that Intrust Funding offers its clients to help them make the most amount of money on each deal. Now before you bombard our underwriter Gabriel with numerous valuation requests there are a few things you should understand. This service is only for Intrust Funding clients, so you must be preapproved or in the process of getting preapproved to request an ARV for a property that you are purchasing. This is not a service for auction deals because the likelihood of actually getting one is very low. This market is very hot and there are multiple offers on most homes, particularly the ones that need work, so please be respectful of his time and limit the ARV requests to homes that you have under contract. We are not only your opportunity partner we are your real estate valuation partner as well!
Are you seeking a loan for an investment property? Contact Carolyn Gossett at [email protected] or 425.999.5203 to inquire about our loan programs or for evaluation, questions email our underwriter Gabriel Heck at [email protected].
If you haven't been to our Investor 101 Class, please join us every other Monday to meet our team and learn about the investment process. Visit our website for more information.
About the author ...
Will Heaton is a co-founder and managing partner at Intrust Funding. As the fund manager, he is responsible for investor relations, underwriting, and new business development. Will has over 10 years of experience in multifamily and residential real estate. Drawing on his comprehensive knowledge of renovation financing and construction management, Will uses a value-add approach to complete his multifamily and residential real estate projects. He regularly gives educational lectures to real estate investors and has been quoted on numerous occasions in well-respected publications. Will has been recognized by the Master Builders Association and Built Green for his work with LimeLite Development and Infinity Land Management. He is an enthusiastic member of the community and enjoys participating in various non-profit groups throughout King County. In his free time, Will enjoys adventures with his wife and their two children, classic cars, and fishing
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