We specialize in Alternative, Soft Money, Stated Income and Institutional Grade Private Lending and Hard Money financial options in the residential and commercial markets.
What does that mean?
What is an Alternative Loan?
What is a Stated Income Loan?
Stated income Commercial real estate loans are an alternative to a traditional commercial loan for borrowers who are looking to buy or refinance commercial property. A stated income commercial loan is generally more concerned with the piece of real estate rather than the borrower’s credit history. The property income value must be capable of servicing the mortgage, taxes, and insurance for a stated income commercial loan to be approved. An advantage to a stated income commercial loan over a traditional commercial loan is that the approval process is much quicker because there are fewer underwriting/qualification requirements and documents needed in order for the borrower to qualify.
Who is a Candidate for a Stated Income Loan?
Stated income lending is perfect for those applicants who don’t quite meet the stringent income, credit, and net worth standards of traditional banks and other A-paper lenders. Ideal clients may not have perfect credit, but they also do not have the type of serious credit history issues that would lead to a hard money loan being their only option. In other words, the perfect candidate is usually the “in between” client, or the client other institutions aren’t sure how to help.
Brokers/agents know that while clients may understand they do not qualify for a traditional loan, they will still want competitive rates and terms. Solana Mortgage Solutions provides a Stated Income product that offers borrowers with average to marginal credit, business purpose financing at a competitive rate. These specific loans are given to borrowers purchasing or refinancing an investment residential property, multi-family dwelling, mixed-use office, retail space, warehouse, or other commercial buildings.
What are Hard Money Loans?
A hard money loan is a specific type of asset-based loan financing through which a borrower receives funds secured by real property. Hard money lenders make the riskier commercial loans, the deals the banks won’t touch. As a result, hard money commercial loans are more expensive than bank loans. Where a bank might finance a commercial property at 7.5% and one point, the typical hard money commercial lender will charge in the neighborhood of 12% to 14% and three points. Hard money commercial lenders look primarily to the property as their source of repayment. If the borrower doesn’t make his payments, the hard money lender will simply foreclose and sell the collateral.
Who is a Candidate for a Hard Money Loan?
A good candidate may be a customer looking for fast approvals, few requirements, out of the box thinking and fast closings. In addition, the kind of customer looking for a loan that will bridge them to a better loan product. These kinds of customers may not have ideal credit or could be foreign nationals without an established credit history here in the United States. Because of their situation or unique objectives, these customers are not always concerned about interest rates or closing fees and understand that even though Hard Money is more expensive, it can be a viable, more flexible option.
What are some of the Perks for Borrowers?
Stated Income lending offers several perks and benefits for borrowers. Again, one of the biggest benefits of these particular products and working with companies like Solana Mortgage Solutions is that, in these cases, we do not have to verify income, and don’t require tax statements, or pay stubs. This makes us a great option for self-employed individuals, or business owners. Another major benefit is that Stated Income Loans usually provide much lower interest rates and fees than those charged by hard money lending. Often we can offer rates as low as the mid to high 6% range. In addition, Stated Income products are usually faster, more flexible, and involve less paperwork and hassle than traditional bank loans.
What is available when a customer doesn’t fit the Stated Income criteria?
Consider Hard Money. In many cases, the approval for the hard money loan can take place in just one day. The hard money lender is going to consider the property, the amount of down payment or equity the borrower will offer, the borrower’s experience (if applicable), the exit strategy for the property, and will make sure the borrower has adequate cash reserves to make the monthly loan payments. As long as everything seems reasonable in these areas, approval will most likely be granted.
Hard Money funding has saved numerous real estate investors who have been in escrow only to have their original lender pull out or simply not deliver.
In the case of a potential borrower who wants to purchase a primary residence with an owner-occupied hard money loan through a private mortgage lender, the borrower can initially purchase a property utilizing hard money. The down payment would generally be 30% and the interest rates are usually 6-7 points over prime. This option allows the client to buy time to repair any issues such as; credit, acting on a time sensitive option, tax return discrepancies or Debt to Income ratio problems. Once the issues have been remedied, the borrower will be able to refinance to a lower cost loan with Solana Mortgage Solutions and our wholesale lending partners, our conventional lender partners or others such as a bank or credit union.
Banks are often unwilling to provide home loans to borrowers who are self-employed or currently lack the required 2 years of employment history at their current position. The borrowers may be an ideal candidate for the loan in every other aspect, but these arbitrary requirements prevent banks from extending financing to the borrowers. A hard money lender would be able to provide a short term loan (1-3 years) to enable the borrower to purchase their property. In the case of the borrower without sufficient employment history, they would be able to refinance out of the hard money loan and into a lower cost conventional loan once they obtained the necessary 2 years at their current position.
How can Private Lenders help commercial investors?
With our Institutional Grade Private Lender partner, we have access to over a half of a billion in funds we can offer our investors for existing commercial real estate or new construction projects. We have specialty programs for home builders who need to expand their business, investors who specialize in the “fix and flip” market and those who want to purchase, rehab and rent their properties. Often the banks are forced to cap the borrower at a particular dollar amount or may require the builder/Investor to increase their bank deposits before additional funds can be released to them. These banking requirements can be a huge obstacle for investors and can cause them to miss opportunities to purchase or build new real estate. There are many restrictions in the traditional banking arena that do not exist in the Private Lending model. Even though the interest rates are higher than the banks, our programs are still very competitive while offering actual and timely accessibility to money. By using us as a resource, investors find that many more projects can be funded. Solana Mortgage Solutions is very proud to offer these options or “solutions” to our clients here in South Texas as well as those in the Central and Northern regions of the state.
How Does Solana Mortgage Solutions Benefit Real Estate Professionals?
Brokers/Agents can also benefit from alternative lending in that instead of turning away clients who do not qualify for traditional loans, you can submit their information to Solana Mortgage Solutions for approval. Your approved clients will be thrilled that you were able to provide them with a great solution. As all real estate professionals know, happy clients mean more referrals and a healthier pipeline.
**Contact us for a consultation to learn more about our services and how we can help you whether you are an investor, home buyer, real estate agent or even a Mortgage broker looking to expand your menu of options for your clients.
2511 Buddy Owens Blvd. Ste C
McAllen, TX 78504
Office Phone: 956.683.6262