Hard Money Lending or "asset based lending" is the loan is underwritten on the bases of the "Hard Asset" or the property. Credit may determine your type of product rate but is not an excluding factor for short-term loans.
Yes! They are called Non-QM loans or Non-Qualified Mortgages. They can range from 5, 10, 30 year variable or fixed rate products. That means this loan is based off your credit score and what is called the Debt Service Coverage Ratio or (DSCR). DSCR is calculated by the current or projected rent divided by your total monthly payments. If your property makes $1,200 a month in rent and the payment (principal, interest, taxes, insurance, association dues) is $1,000 a month, then $1,200/$1,000 = 1.2. That would give you a DSCR of 1.2. The higher the DSCR, the lower the risk, the better the rate. You can use Non-QM loans for purchases, refi's, and cash-out refis.
There are Interest Only (IO) options as well and Non-DSCR options as well that can range from 3 years to 30 years. It is best to talk with our long-term experts to work through all the variables to get you a good idea on where you stand on rates.
Plan to close within 3 days of clear to close from your title company and appraisal report delivered. Normally that is about 7-10 business days. Remember, we help coordinate all your parties, but you as the borrower have to schedule your closings with your escrow officer from your title company. Make sure you stay on top of all your team members to make sure they are keeping you up to date on any new conditions that may come out when clearing the property for closing. We will work as a team so it doesn't feel so overwhelming for you and get you what you need.
You will need to provide insurance for the property. Hazard insurance is required for all properties. Flood Insurance is needed if the property is in a flood zone or has flooded any time in its history. As soon as you order appraisal, its best to get your insurance company involved to quote your property. Remember, this is an investment for you, so use insurance companies that know how to write investment property policies and not home owner policies to make sure your property is covered. Jet Lending does not have a preferred insurer but if you are having trouble finding someone let us know and we can give you some referrals. Any referral Jet Lending makes is not affiliated with Jet Lending in any way, they just are known in the industry to provide products investors need.
We are an asset based lender so we base everything off the "hard asset" which is the property. What sets Jet Lending apart is that your team here wants you to be successful and grow your independent wealth and freedom. One way we do that is, we make sure you are safe in the loan and can handle the process of renovating and/or holding your investment property to achieve your goals. We look that you have access to at least 1/3 of your renovation budget, 10 months of interest payments, and any out of pocket costs at closing, if there is any, so we know you can handle the investment. We do not require you we hold this money in our account, we just want to see that you have access to this so we know you can pay your interest only payments on time, continue the renovation process as we reimburse draws, and if you were out of pocket at closing, we know you have the funds to bring so you don't lose your deal.
In Texas, we can. 100% financing is when you do not have any out of pocket costs at closing. In Texas, we are a Loan To Value lender. Many lenders say they are loan to value, but if you do not offer your borrower 100% financing, then you are a Loan to Cost lender with a Loan to Value max loan. How 100% financing works:
We lend up to 70% of the After Repaired Value (ARV) Total Loan and we are minus repairs at closing. Let's look at an example with easy numbers:
Funded at closing: $70,000 - $20,000 = Up to $50,000
Out of pocket: $40,000 - $50,000 = -$10,000
That means we have about $10,000 to roll in any of your closing fees and title fees to the loan so you would walk into the Title company, sign, and leave without paying anything at closing. The only variable you can change in your investment purchases is what you are paying for the property. Your purchase price is going to heavily dictate if you can get 100% financing. Get with your Jet Lending team to go over numbers with you today.
All other states outside of Texas, we offer 80-90% LTC with a 70-75% max LTV.
For short-term loans that are lot & block, you do not need a survey. For any Non-QM long term product or any property that is meets & bounds, you will need to order a survey. If a survey is needed, make sure to contact your title company and request someone they use so they can clear your property for closing. Remember, Title is a sellers issue, not a buyers issue. Depending to what you agreed to on your contract, the seller may need to furnish you a survey to use to clear title. A good protocol is to always ask your seller if they have a survey they can transfer over to you at closing no matter what you are buying so you have this. Nothing can be more frustrating to an investor to see that there are easements or issues to the structure on the survey that now they have to fix or deal with so get with your title company officer and go over your options.
If you are buying, refinancing, or cashing-out land or a commercial property, a Phase 1 may be in order. A Phase 1 environmental is a report to see if there are any environmental hazards that need to be remediated from the property. A Phase 1 may show evidence of environmental hazards and require a Phase 2 and rarely a Phase 3. Just like survey's its a good practice to ask your seller if any appraisals, phases, or surveys have been done to the property and offer a copy to you for review. Get with your title company to help order a phase report especially if your property is, adjacent to, or has been a mechanics shop, dry cleaners, nail salon, funeral home, gas station, has active or capped oil wells, has a pipeline through it, or anything that could have caused environmental damage to the land. You do not want to be on the hook on remediating an environmental hazard so always protect yourself and investment with these reports.
In Texas, you can close in your personal name or a business. In most other states, you will need to have a business entity. If you decide to close in a business entity, that entity has to have the right to do business in that State. For example, you have a Nevada LLC and you are buying a house in Dallas. You have to register that LLC with the State of Texas that this Nevada LLC can do business in Texas. If you were House Buyer, LLC out of Nevada and there was a House Buyer, LLC in Texas and you do not have the right to do business in Texas, you may have some issues if that other LLC pursues this property. Get with the secretary of state and just make sure you out of state LLC has a DBA in the state you are buying in. We are not attorneys and cannot make legal advice, so get with your council on this matter if you need further options or explanation.
If you close in a business entity, we need to see your formation, filling, EIN letter, and operating agreements. Your formation, filling, and EIN Letter were provided to you buy your preparer and/or Secretary of State but your Operating Agreement is something you make. If you do not have one, find a template online and make your operating agreement and/or discuss with your attorney what your best practices will be for your business. We cannot make legal advice so make sure you coordinate with your accounting and legal team on all the ways you can form your business. Be aware, Powers of Attorney (POA) are not accepted for one signer for multiple parties in the business. All managing members of the business must sign and provide personal guarantees to the subject property.
If you are closing in a personal name and are not married, you would just need to have your current ID and sign your documents and personal guarantee.
If you are closing and are married there are two options.
1) You are closing and signing but your spouse is not affiliated with the loan. In that case, your spouse still needs to sign a document at closing hypothecating their right to the property. They are not signing on loan docs, but they need to sign their rights away to the property. This happens in case of divorce or the spouse trying to homestead the investment property. Hypothecating the rights allows the one spouse to sign.
2) Both spouses are affiliated with the loan and both will sign personal guarantees at closing.
Draws are reimbursements for completed work. The borrower will complete the work and add value to the property and request funds to be released from their escrow account. On the top of the website, you will see, "Request a Draw". Click that and log into your portal. You will need to fill in the items you are requesting for inspection and reimbursement to make sure we always keep what is needed to complete your project in escrow. We will not be able to give a draw just for demo, materials, or appliances. Demo has to have something added to improve the value of the property so you are leveraged appropriately with your value and your loan. Materials and Appliances must be installed to reimburse, so don't buy everything you need and put it in storage and request a draw. We will only be able to reimburse for those items once they are fully installed in the subject property.
Jet Lending has never called a note due as long as the investor was paying their interest payments on time. If your loan term is coming to an end, we will extend the term and send you extension paperwork to sign. You have to renew your insurance and sign these documents to extend your note. If you do not renew your insurance, we will have to force-place the insurance to make sure the subject property is covered and will be expensed to the borrower. Normally, force-place insurance is much more expensive than renewing so make sure you work with our servicing team to get what you need.
Interest-Only payments are due on the 1st of every month. We provide option to you in your loan process to provide an ACH and a second form of payment we will pull from every month. For any reason in the term of the loan, this information changes, let us know ASAP so we can make changes and help you make this process simple and easy. If you ever run into problems making payments, let us know so we can try to structure something to help. We are here to work with you, get us involved as soon as you can.
On the top of the website you will see "Request a Payoff". That automatically goes to payoffs@jetlending.com. We will need to have the property address and the date you need the payoff to be calculated. There are never pre-payment penalties for early payoff. Please provide the Title Company on the email with payoffs@jetlending.com so we can make the process efficient for all parties.
For our short-term loans, there is never a pre-payment penalty in Texas. Long-Term loans depend on the type of product you moved forward with. So, make sure to discuss your loan terms, especially long-term loans, on if the term is fixed or has an ARM.
We are there for you every step, from originating your loan to payoff. If you have any issues through the process, make sure you get with your loan officer and servicing team so we can try to find solutions for you. We are apart of your team and we will try to get through any issues together to try to keep you safe and moving forward in your process.
Jet Lending, LLC is a fully audited company. Every year we hire 3rd party accounting firms to provide an audit for our practices. If you close a loan with Jet Lending, LLC, you may receive a letter for you to confirm that you closed a loan with us where it asks you to sign and return. If you receive one and still have questions, reach out to us at (281)872-7800 or accounting@jetlending.com.
