#יםמהשבוי Post 6 – American funding Today I want to share with you some of the extensive knowledge that...
# Initiated week Post 6 – American funding
Today I want to share with you some of the extensive knowledge I have acquired in the field of lending in the US.
As investors or entrepreneurs who do not live in the US and especially those who lack social security, the challenge of obtaining American financing is very great. For those who lack experience in the field to which they want to get a loan, the challenge is even greater.
Of course, anyone who can get financing from the country to start getting the experience and obviously not everyone wants to take out a US loan and that's fine too.
When talking about loans one should separate between loans for residential homes and commercial projects (multi-family five doors and up, a mall or other projects that are not residential homes). Although there is a lot in common I will talk here about my experience which is in loans for private homes. In these loans usually the emphasis is of course also on the project and the practical experience of the entrepreneur but also very much on the personal financial capacity of the entrepreneur as he will be required to sign a personal guarantee in most cases and his assets should be to the extent provided by the lender.
Which means that for those without social security, the more challenging loan is precisely that of the private houses, when the top of the pyramid is the new construction. There are far fewer lenders willing to lend to foreigners and the conditions there are even stricter than a flip loan and this is mainly because the lender wants to see a property that is connected to the land for as much of the loan amount as possible. The lender puts a mortgage on the property, what is not attached to the property does not belong to him. Since in a new construction what is available at the time of loan approval is only a lot, the risk from the lender's point of view is greater and if you do not have social security, your personal guarantee is more challenging for him to realize.
I wanted to give you a few points to note when applying for a loan:
- First thing beware of scams - Warning sign: If you are asked to give something "on the bill". Asking you for money in order to check your eligibility / link you to a lender who "will surely give you a loan", ask for money before closing to arrange the loan. The only time you are really required to take money out of your pocket and pay the lender the closing cost is by closing yourself through the attorney who is making the loan.
- Know who you are talking to - Have you reached out to the lender himself or are you talking to a "broker" who will link you to a suitable lender. There are a lot of brokers in the field and it is completely legitimate, just make sure that the questions you ask are answered seriously and with the right answers, you should ask for answers from the lender himself and not from the broker. I can tell you that in the first loan I took I worked with a broker, he was very nice, available and comfortable to work with and indeed got me the loan I wanted. But much of the information I received about the terms of the loan was incorrect, in my opinion due to the broker's poor communication with the company. He was a decent man but apparently did not understand some of the answers he received or did not know how to ask the questions I asked him in the exact wording. God is in the details J I of course do not say here not to work with brokers, they are great to get you loans in awe at the beginning, just need to understand who you are working with and make sure all the time you get accurate information. Also broker = additional commission. Again, many times it will pay off for you because he will get you good loan terms, just make sure you get the information about his commission and understand exactly the total cost of the loan.
- Costs:
Loan interest - Understand whether you are paying interest on the entire loan amount or only on the amount actually taken. Usually the transfer of money will be in stages and you want to pay only for what you actually took. Another thing: Are you obligated to take the entire amount of the loan or if you do not need you do not take.
Points - Each point is a percentage of the loan amount when the closing status has the cost of points that need to be paid regardless of the loan
Additional fees - payment to an attorney to cover all closing costs, to the appraiser, for inspection at the time of payments, to the broker if there is one in the picture.
You can usually get some of the closing costs at the expense of the loan. Ask of course.
- What is the duration of the loan, is it possible to extend it, is it possible to refinance when the house is ready if you were unable to sell it in time or if you want to rent it out.
- What documents are required of you exactly, usually capital statements, tax reports of the last two years, personal and of your llc, experience in the field and more
- For new construction your contractor will also be required to fill out documents, please note that your contractor can and is willing to cooperate
- What is the minimum and maximum loan amount they are willing to give.
- What is the LTV - loan to value - how many percentages relative to the value of the project are they willing to give and how much will you have to put down payment
- Are interest payments monthly or at the end of the loan - significant! Do you need to have the amount to pay the interest aside.
- Are there exit fines
- The speed they can close
- Do they provide a pre-approved letter that will make it easier for you when finding the deal.
- Most loans will be with a personal guarantee (for a single family) but worth asking
You will always ask to read the loan agreement (at least the essential points) before reaching closing status and of course if there are any clauses that you do not understand you will want to discuss with the lender.
And remember that loans have to pay, so plan your project so you have a breath of space. Successfully !
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Efi Danieli
Thanks!!!
Good post Anat! Came in time
Thank you so much, excellent post
Well done! How valuable to readers! Really honest! Happy New Year!
It is no problem for foreigners to receive financing for construction
I do not see a foreigner who does not live in the US receiving funding for construction, especially on the terms you specify.
Excellent post!
Neri Malka
Anat Segal
Hi… What types of escorts are you talking about? A US bank? And if it's through a bank in the US that Ray can be trusted that everything is done properly no? By the way, the title company is actually responsible for the finances during the project and that everything will be done legally ... right?
Hi Anat,
Well done for the initiative!
I would love to chat and see if we can help each other, after endless inquiries we are in the process of getting a loan for a portfolio
Yafit Levin
Roni Yore
Yaniv Dafni
Raz Yore
Roy Tzach
Keep memorizing and remember thanks a lot !!!
Excellent…
Great post !!
Thank you !
A post that needs to be framed and hung! Thanks ??