In Costa Rica, non-residents have limited financing options compared to permanent residents or citizens and…
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) is so important. 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 Groupo 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 us 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. If the pool is green because the pump is not working or if the house is run down, inherited or purchased a few years ago for X and magically has tripled in value over the last few years….well, all these things start making this loan very uninteresting.
Over the years, we have seen and heard it all.
We at Groupo 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? 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. Let’s lose this line as we have addressed brokers and referral fees in other blogs!
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. (lose that statement) There is always the assumption or hope that the borrower will present the property in an honest and clear fashion, however, our extreme due diligence always peels back the layers and we quickly get to the reality of the situation!
The reality is that we are here to provide funds to the borrower, and the lender is allowing the borrower to use his hard earned money in return for a monthly check with a payout at the end of the term!
Sounds simple? It is.