loans
How Short-Term Loans Help Companies Do More
Running a small business can be a rewarding opportunity, but it takes a lot of work. New business owners in the first few years of incorporation may find themselves in a tight spot from time to time. When you’re trying to bring in profit and business suddenly slows, it might be frustrating to find a solution. You still have to pay your employees and keep the electricity on even when no customers are coming through your door. Fortunately, there are some funding methods that help businesses get past tough times.
Ask a Bank
When you’re looking for a solution to get you past a dip in sales, asking a financial professional about short-term loans is a good place to start. Instead of aiming for a large loan, think about getting just enough for your needs. Bankers can help people decide what kinds of financial products will work best for their exact problem. Tell your financial professional everything that you’re wanting to accomplish and in what time frame you must do this. You must demonstrate a purpose for the money before a bank will loan it to you.
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Consider Other Options
Before you sign on the dotted line with a lender, take the time to see what other options are available besides short-term loans. Ask your banker about different types of products and what their terms are. It’s a good idea to educate yourself on what’s out there so you know where you can turn in the future for other funding needs. Compare interest rates, payment terms, and approval requirements for other kinds of loans.
Make an Informed Decision
After you’ve consulted your financial professional and researched other available products, then it’s a good time to make your decision about applying for short-term loans. Some of these products may even be backed by the United States Small Business Administration. The SBA works with banks and other financial institutions to partially guarantee loans for small business owners. Because these products hold a little less risk for the lender, they are sometimes easier to qualify for. the SBA offers both long and short-term products that are designed to fit the needs of smaller enterprises. Choosing one of these kinds of loans may be more favorable.
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Once you’ve put in your time and research, you will find a good loan for your business. Staying informed about finance will help you make wiser decisions down the road.
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How To Become A Mortgage Loan Officer
Submitted by Stratton Equities
One of the best jobs you can go for these days if you want to work hard, make a lot of money, and change the world around you is to become a mortgage loan officer. There are so many opportunities out there in the real estate world to make a living, but one of the most fulfilling and lucrative is to become a mortgage loan officer for a private money lending firm.
But what are the steps you will have to take to even become a loan officer?
Like most careers that deal with highly valuable assets and specified levels of management and service, to become a loan officer, you need to get your license. The NMLS, or Nationwide Mortgage Licensing System, offers a variety of mortgage licenses but the one in particular that applies to loan officers most is the Mortgage Loan Originator (MLO) license.
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How to get licensed as a Mortgage Loan Officer/Originator
Getting an NMLS license will certify that as a loan officer, you are now able to legally serve as a mortgage loan originator. Additionally, it informs your prospective clients and employers, that you are knowledgeable of all the laws and regulations that come with mortgage lending.
More specifically, obtaining an NMLS license means that you have completed a class that teaches you all the requirements for serving as a mortgage loan officer, and that you have passed the SAFE Mortgage Loan Originator Test.
You must complete both tasks to be properly qualified to apply for the NMLS license. Once you have your NMLS license, you can easily apply for most private lending and conventional mortgage lender positions.
Although the Nationwide Mortgage Licensing System (NMLS) License covers across the country, you will still need to apply for an individual license per state you are looking to lend in.
Applying to Become a Mortgage Loan Officer with a Private Lender
Believe it or not, the next step in becoming a mortgage loan officer is finding a position at a private lending firm that suits your needs and interests. The NMLS license qualifies loan officers for all private lending and conventional lending mortgage companies. This will allow you to apply for all loan officer positions, however, you will still need the individual license per state.
After applying at your desired location, the interview process shouldn’t be too surprising or different from any other high-level interview process as they will mainly ask you questions and test you on your skillset, knowledge, and ambitions.
Once you’ve secured the position, the best private lending firms will provide thorough training, management, and support.
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Working at a Private Lending Mortgage Company
Through training new loan officers, a private lender prepares their sales team to help guide them to mastering some of the nuances required as a loan officer, that cannot be taught purely through an academic mindset.
You must be ready and focused as a loan officer and this level of training throughout the first few months of the job will help get you to that point.
As important as it is to get certified by the NMLS, there is only so much you can learn by studying laws, memorizing loan options, and practicing unique scenarios. The real test of grit is to see how well you work in a real-world setting.
To be successful as a loan officer you need to be sharp-minded at all hours, diligent in the details, dedicated to working hard, and affirmative in your tone, actions, and decisions. Furthermore, be intuitive enough to understand what is a good deal and how to thread the needle if plans don’t go as expected.
The work will be hard but the rewards are great. On average a mortgage loan officer at a private lending mortgage company can make an average of $150,000-$250,000 a year.
Securing Your Position as a Mortgage Loan Officer
To secure your career as a successful loan officer at a private lending institution, there are a couple more things you can do to ensure your success.
Firstly, there is the option to get certified by the Mortgage Bankers Association (MBA) and/or the American Bankers Association (ABA). This step is optional and not required for the position of loan officer, but getting this certificate can help boost your credentials, entice more clients to come your way, acquire yourself more deals and negotiations from borrowers, and specialize your skill set such that you are even more knowledgeable and prepared as a loan officer.
Lastly, you must renew your NMLS license every year. This is to ensure that whoever is still practicing they are aware of certain changes in the law, whether it be on the nationwide level or statewide. Additionally, renewing your license frequently keeps you fresh and sharp-minded as you are regularly checked on how well and how prepared you are at the job.
These are all the principal steps one takes when seeking to become a loan officer. The process is fairly intuitive for this type of position while also being thoroughly detailed in ensuring that only the best and most prepared are the ones handling multi-million dollar real estate investment deals.
Become a Mortgage Loan Officer/Originator with Stratton Equities! We’re Hiring!
If you are a licensed Mortgage Loan Originator that is new to the industry and is having a difficult time finding business, we have the solution.
Stratton Equities provides our loan officers with daily direct organic leads, that are from people that call into or apply to our offices looking for a mortgage. Not the other way around. We have a time-tested model that includes a state-of-the-art CRM and lead generation, amazing hands-on training, and the widest range of mortgage loan programs in the industry.
We have niche products that specialize in different types of loans such as Hard Money, No-DOC Loans, Soft Money Loan Programs, Non-QM Loans, Conventional, Fix & Flip, Commercial and more.
Benefits of working with Stratton Equities:
Direct Organic Leads
Hands-on Training & Support
Largest library of niche loan products – say “YES!” more!
Pay: $158,086.00 – $294,677.00 per year
Benefits: 401(k), Dental insurance, Health insurance, Vision insurance
For more information on how to get started as a loan officer, visit Stratton Equities today. We offer the largest variety of loan options that can all be directly accessed by our borrowers. Our starting interest rate is the lowest out of any private money lender, and you can get your loan approved in as little as 24-48 hours.
Additionally, our average time frame in closing loans for our new loan officers is 4-6 weeks after training.
Apply Now at https://www.loanofficerscareers.com and email us at [email protected]
4 Tips for Qualifying for Commercial Real Estate Loans
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Commercial and residential real estate have quite different requirements and qualifications for loan applications. Here are four tips for qualifying for commercial real estate loans.
1. Have Proof of Income Available
The lender will need to know about your income sources and income level before you can be considered for commercial real estate loan approval. This is because the lender needs to be sure your monthly income will be able to cover both your regular expenses and your monthly loan payments. If this is your first time applying for a loan, have your tax forms available, for example, a W-2 form. If you already own or manage properties, bring your portfolio so the lender can review your global cash flow.
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2. Know Your Credit Score
Your credit score won’t hold quite as much weight when you seek a commercial real estate loan as it would for a residential real estate loan, but that doesn’t mean it’s not still an important piece of information. You should make sure your credit score is at least higher than 500. Ideally, however, it should be above 600. If your score falls below 500, you’ll have a much harder time trying to qualify for a loan.
3. Know Your Net Worth
Your net worth will be a much more important factor than your credit score. Net worth is the difference between someone’s liabilities and his or her assets. It will likely be the first thing your potential lender will want to review. Lenders want to make sure your net worth is greater than or equal to the amount of money you’re asking for as a loan, for similar reasons as making sure you have sufficient income.
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4. Inform the Lender of Management or Ownership Experience
Crucially for commercial real estate, you need to inform the lender about your experience in managing or owning properties. Let the lender know whether you have prior experience in these areas or not. If you don’t you may need to explain why you’re seeking to enter the market now. If you do, then you need to be able to show the lender what kinds of properties you’ve owned or managed and how your skills and experience translate to the new property or resources you’re seeking a loan to finance.
If you’re looking to apply for a real estate loan, you should understand both what information is necessary for you to qualify and how the processes differ between commercial and residential real estate industries.
Short-Term Rentals and DSCR Loans
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By Rick Tobin
Over the past several years, most short-term and long-term rental property owners created the bulk of their wealth from the annual equity gains related to buying and holding their properties as values increased anywhere between 10% to 40% per year. In California alone back in 2021, it was reported that the average home statewide increased in value $11,000 per month or $132,000 for the entire year. If so, I doubt that many Airbnb or VRBO hosts collected more than $132,000 in gross or net rent profits.
Image from Pixabay
Did you know that San Diego, California was ranked as the #1 for having the highest gross revenues of any Airbnb region in the world in 2021? Please see the complete Top 10 list of the highest grossing rentals in the world later in this article.
Let’s look next at just some of the short-term rental listing companies which assist vacation rental property owners with the leasing of their properties:
- Airbnb
- VRBO (Vacation Rental By Owner)
- Booking.com
- TripAdvisor
- Expedia
- HomeToGo
- Tripping
- Homestay.com
- Atraveo
- OneFineStay
The prominent travel booking company named Expedia purchased VRBO back in December 2015. As a result, Expedia continues to be one of the most dominant short-term rental companies in the world.
As per published Airbnb data, here are the Top 10 states for average annual host or property owners earnings for 2021:
- Hawaii: $73,247
- Tennessee: $67,510
- Arizona: $60,448
- Colorado: $58,108
- California: $54,461
- Florida: $53,209
- South Carolina: $49,641
- Utah: $48,568
- Oregon: $42,964
- Alabama: $41,937
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If a rental property owner confides in you that he or she collected $50,000+ in gross income from Airbnb last year, this number may only represent a small percentage of their overall total revenue collected from both short-term and long-term tenants (30 days+) because they may have multiple income stream options by way of VRBO, Booking.com, or other companies that help supply them with consistent tenants. This is especially true when the property is located in a populous metropolitan region or a prime vacation getaway area like those found in San Diego, Santa Barbara, or Miami.
No Income Verification Loans for Rentals
Most real estate investors usually need third-party mortgage financing to purchase one or more rental properties even if they are very wealthy themselves. Many years ago, it was quite challenging to qualify for a rental property because you were asked to provide two years’ worth of tax returns, a detailed profit-and-loss statement, and the mortgage underwriters would only give you credit for 75% of your gross monthly rents when attempting to qualify or deny your loan request. This 75% number was due to the fact that lenders assumed that you had property management fees, vacancy rates above 0% throughout the year, and operating expenses for repairs.
As a result, that $2,000 gross rent turned into just $1,500 (75%) and many investors were later denied because few lenders wanted to lend on a rental property with negative monthly cash flow if the proposed monthly mortgage payment (principal, interest, property taxes, insurance, and homeowners association fees, if applicable) was $1,501 or higher.
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Today, many investors are qualifying to purchase short-term and long-term rentals by way of non-QM or DSCR (Debt Service Coverage Ratio) programs which don’t require borrower applicants’ tax returns, W-2s, or other formal income documents to qualify. Now, some lending programs take the closest look at the subject property before determining if the rental property can at least break-even at a 1.0 DSCR number where 100% of the gross monthly rents are at least equal to the proposed mortgage payment. In these underwriting scenarios, 100% of the gross rents are used to qualify instead of just 75% like was more the norm in years past.
For a DSCR loan, it allows borrower applicants to use the market rent (actual or future, in some cases) of the property to qualify rather than the borrower’s business income. This is especially beneficial for self-employed business owners or investors who have a lot of tax write-offs and minimal net income shown on their tax returns.
Some of these DSCR program highlights include:
- 640+ FICO
- Up to 80% LTV
- Available on investment properties only
- Finance up to 20 properties
- Loan amounts up to $2M per property
Some of my other lender programs allow negative cash-flow for rental properties up to 70% LTV for cash-out or purchase transactions while not requiring any additional income from the borrower applicant.
Airbnb Statistic
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Because Airbnb is the biggest name in the short-term rental business sector, let’s review some of these shocking numbers that confirm how successful this investment property model has been for Airbnb corporate and for individual hosts or property owners.
Airbnb History
- An average of six guests every single second check into an Airbnb listing.
- Airbnb listings represent 19% of the total demand for lodging in the US.
- Over 150 million people have booked over one billion nightly stays.
- The average US Airbnb occupancy rate is 48%.
- The average stay is 4.3 nights.
2021 Data
- The global Average Daily Rate (ADR) was $137 per night in 2021 as compared to $110/night in 2020.
- California properties had a much higher nightly average of $258 per night.
- In December 2021, there were 12.7 million listings worldwide.
- There were 2,249,434 listings in the US in 2021.
- 356.9 million nights were booked on Airbnb in 2021.
Highest Gross Revenues Worldwide for Airbnb Properties
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Surprisingly, these populous metropolitan regions such as Los Angeles, San Francisco, New York City, Paris, London, or Hong Kong weren’t ranked #1 for being the most profitable Airbnb region in the world with the highest gross revenues. No, the honor for the most profitable Airbnb region in the world in 2021 was San Diego, California.
In 2020, seven of the Top 10 highest gross revenues for Airbnb properties were all in the US. One region that stands out is Big Bear, California, which is the best-known mountain resort community in Southern California. Listed below are the 2020 gross revenue numbers for the Top 10 regions in the world:
Compounding Wealth With Equity Gains
There are many individual or family investors across the nation who have acquired 5, 10, 15, or 20+ short-term rental properties. The bulk of their family’s net worth doesn’t usually come from the net annual rental income. No, the family’s net worth is compounding each year with double-digit appreciation rates like we’ve all seen for several years now.
To better understand how the acquisition of multiple rental properties is more likely to create the bulk of your net worth, let’s take a look at a fictional California property owner who saw each of his rental homes appreciate $11,000 per month or $132,000 for the entire year in 2021:
Investors can apply any excess net rental income each year to paying off their mortgage faster. With consistent annual rents, a 30-year mortgage or a shorter-term 5-year or 7-year interest-only mortgage with much lower monthly payments than the best 30-year fully amortizing rates can be paid off much faster as more principal is paid off with extra payments.
The sooner that your homes are free and clear, the earlier you can retire and live off of the monthly cash flow while not touching your equity gains. A fairly consistent plan of buying and holding short-term and/or long-term rental properties is a prime example of letting your money work hard for you instead of the other way around.
Rick Tobin
Rick Tobin has a diversified background in both the real estate and securities fields for the past 30+ years. He has held seven (7) different real estate and securities brokerage licenses to date, and is a graduate of the University of Southern California. Rick has an extensive background in the financing of residential and commercial properties around the U.S with debt, equity, and mezzanine money. His funding sources have included banks, life insurance companies, REITs (Real Estate Investment Trusts), equity funds, and foreign money sources. You can visit Rick Tobin at RealLoans.com for more details.
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How Much a Home Equity Loan Can be Useful to Pay Off Credit Card Debts?
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By Catherine Burke
You are not alone if you have recently faced financial challenges, such as a loss of employment, significant medical bills, or a tragic incident. The majority of the world’s population is affected by the COVID scenario. Over 57% of American adults, for example, are unable to pay medical costs, which are the leading cause of personal bankruptcy.
Some people may attribute their financial difficulties to illogical spending or bad saving practices. If you’re one of them, and you have a significant outstanding balance on one or even more credit cards, you might be finding it difficult to get out of debt. If you can only afford to make minimum monthly payments, paying off your credit cards might take several years, if not decades.
If you own a home, you might apply for a home equity loan and use the funds to pay off your credit card debt. You might be able to handle high-interest unsecured debts like credit card debt or payday loans using a home equity loan. Let’s look at the best ways to do that through a home equity loan.
But before going further, let’s know a bit more about Home Equity loans.
What is a home equity loan?
A home equity loan helps you borrow against the value of your home that has grown over time. If your home is currently worth $500000, but you owe $200,000 on your home loan, you have $300,000 in equity.
A financial institution, credit union, or other lenders might be willing to give you a home equity loan equivalent to a percentage of your equity, depending on this information. Other criteria, such as your credit score, will influence how much you may borrow and if you can get a loan at all.
Requirements to borrow from home equity
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Analyze your requirements, how they would fit into your finances and style of living before taking out a home equity loan. The criteria differ depending on the lender, but in general, you’ll need:
- A specific amount of equity in the house (15 percent to 20 percent)
- Creditworthiness
- Low debt-to-income ratio (DTI)
- Having enough income
- A decent payment history
The balance between the amount you owe on your home loan and the home’s market value is known as equity. Lenders use this number to compute the loan-to-value ratio, or LTV, which determines whether you meet a home equity loan criteria.
How can you qualify for a home equity loan?
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You would be able to qualify for a home equity loan too easily before the COVID-19 issue. It was simple to obtain one if you had a consistent salary, a good credit score, and a home with sufficient equity. It’s now more difficult but not unachievable.
Building on sustained gains since the conclusion of the Great Recession a decade earlier, U.S. homeowners increased their equity share by $590 billion to a record $19.7 trillion during the first qtr of 2020, up 6.5 percent from a year ago.
While lenders’ criteria and risk appetite vary, their authorization processes are based on fundamentally the same factors.
Borrowers must typically maintain 20% ownership interests in their homes after taking out a loan, with few exceptions. Only $60,000 will be accessible for borrowing in the given scenario (if the house value is $200,000, with $100,000 equity).
This minimizes the risks for lending institutions. A borrower who has engaged at least $40,000 in a property is unlikely to abandon it. Homeowners would also be prohibited from renting their property to someone who would damage the property. This $40,000 also protects lenders from losing money if the borrower surrenders the assets during a market slump.
When evaluating applicants with substantial collateral, Lenders have more flexibility, but they still rely significantly on credit ratings when determining the loan’s interest rate. A credit score of less than 600 is considered bad, and obtaining a home equity loan will be challenging.
Are you worried about your credit score? Consider seeking credit counseling from a non-profit credit counseling organization for advice on how to improve your score before applying for the home equity loan.
Information you’ll need to apply for a home equity loan
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Collect all of your financial records and essential papers ahead of time to make the home equity loan application as simple as possible.
The following is the list of information that you may need to submit with your home equity loan application properly:
- The number given by the Social Security Administration
- The alimony and child support documents
- Proof of your previous work experience (at least two years), as well as the contact details for your last employer
- Proof of your income for the last two years
- Proof of ownership and house insurance declarations
- A copy of your most recent pay stub
- Statement of the current mortgage
- W-2 statements from the previous two years
- An appraisal or valuation of your home
- Existing debts and liens on your home
You’ll also need to produce various signed paperwork that your lender would want. It’s time to approach a lender about filling out a loan application once you’ve gathered all of the necessary information. You’ll be on your way to closing once your banker has submitted your home equity loan application.
This period, however, varies from one homeowner to the next. The money will be yours as soon as all documents are finalized and closed.
How to pay off credit card debt with a home equity loan
To use a home equity loan to pay off credit card debt, you must be first eligible for a home equity loan. A home equity loan, often known as a second mortgage, will allow you to take a lump-sum payment on a portion of your $100,000. You can spend the money as you wish and repay it over up to 30 years.
The long payback period and fixed, lower interest rate can help you get out of debt quickly. Furthermore, if you stop taking new credit card debt, your home equity loan can assist you in making steady progress toward debt elimination.
If you get a home equity loan to pay off your debts, remove your credit cards from your wallet and put them away. This way you won’t be tempted to use them for impulse purchases.
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Many experts recommend cutting them up at this point so that they can’t be used. However, you should have at least one in case of an emergency, such as a significant medical expense or home repair or a backup while traveling. However, keep it hidden most of the time to avoid temptation.
The benefits of paying off debt with a home equity loan
The main benefit of getting a home equity loan and repaying high-interest debts such as credit card debt or payday loan is that you’ll typically get a lower interest rate than you would on those debts.
Unsecured personal loans have rates that range from little under 6% to 36%, based on factors like your credit score, yearly income, and debt balances. Consider an interest rate of roughly 20-25 percent if you have an issue in any of these areas. So, getting a personal loan to pay off debts like credit cards or payday loans will be difficult.
With the Federal Reserve’s 10-year-bond yield hovering around 0.6%, Jan 2022 home equity loans are available starting as low as 4%. The average interest rate on a home equity loan is just 5.96%, whereas the typical credit card is 19%, and the average interest rate on a payday loan is 391%.
When you utilize a home equity loan to pay off several credit cards, you’ll be able to consolidate your multiple credit cards through only one monthly payment on the home equity loan. On the other hand, you may also use that money to settle your credit card bills and pay them off with significant savings. If you similarly deal with your high-interest payday loans, you may get rid of them by choosing the payday loan consolidation method or payday loan settlement option. You can use money taken from your home equity loan in both cases.
But you should remember one important thing. The interest on a home equity loan a borrower paid to the lender was once tax-deductible. But this significant benefit of home equity loans has been stopped until 2026. Interest on home equity loans is now deductible only if a borrower uses the loan to “purchase, build, or substantially renovate” the home, according to the Tax Cuts and Jobs Act of 2017.
Author Bio: Catherine Burke is a financial writer for online payday loan consolidation. She provides information on successful cash loans and payday loan consolidation to help people get over a difficult patch. She lives in Kansas and has earned a frame in the matter of payday loans.