The first step in obtaining an equity loan is filling out the loan application form that we provide online. This application form is very important for us to get a complete snapshot of the following:
Knowing who the borrower is and how the loan will be repaid (serviced). This information helps us in determining the amount of debt the borrower can service. Many people ask “well it is secured by an asset, why should they care?”.
The reason is simple, we do not want to see you lose your property in a foreclosure, and neither do our lenders. Taking peoples homes is not what Gap is all about and is definitely not what our lenders want either. ‘
This is an asset-based loan and therefore it is very important to understand all aspects of the collateral. We understand that people come to us often with less than perfect track records.
That is ok, in the sense that we need to determine what the issues are. It is better to volunteer them than for us to find out on our own. We always find out through our due diligence process if the property has tax issues, if the current loan has been paid on time or if there is an existing loan in place.
We can address many of these issues and help resolve the issues IF we know what the underlying problems are beforehand (if there are any).
Here is what happens when things aren’t revealed to us in advance:
We usually see an incomplete application form with few pictures (if any are supplied). We meet the borrower and begin to ask questions about the ability of the borrower to service the loan that has been requested. It does not take long to determine whether the capacity is there or not to service the loan payments.
There’s a lot of arm waving, “hmm’s and well….” and “maybe if this sells for this I will get that..”, etc.
Once we determine that the borrower can make the payments, we do a site inspection. Pool is green, pump is not working, the house is run down, it was inherited or purchased a few years ago for X and magically has tripled in value over the last few years!? So many things that start to make this loan very uninteresting.
Over the years, we have seen and heard it all.
We at Gap understand that many loans come to us out of need and people are apprehensive to tell us the whole story, but better to be upfront to see how we can help you. We have a variety of different options available to do this. Why not take the loan in segments? Example; you want $75,000.00 for medical bills and home renovations.
We can arrange the loan in a way that the property is definitely renovated first to increase the collateral and get your bills caught up afterwards. (true story). Brokers also have a key role in this: We have a few key brokers that we are working with but are not co- brokering with anyone else at this moment.
We are currently hashing-out the structure that will allow us to offer referral fees.
Why? Because, brokers have been known to tell a few little white lies as well. All of these exaggerations, omissions and untruths create a dilemma for all of us. First, we have to work twice as hard uncovering these omissions. Two, the trust factor is breaking down quickly which means interest rates are going up and co-broker fees are going down.
It is as if we have to redo the loan over again and we always inform the lender of our findings which can scare off our lender. In the end, no one wins. There is always the assumption or hope that the loans are conducted in good faith by both parties.
The borrower would like a hand to accomplish what they need to and the lender receives a monthly payment for allowing someone else to work with their money and will be reimbursed in full, at the end of the loan term.
Sounds simple? It is.