The Chicken or the Egg?

[Brenda Whittaker]

So we hear so much about rehab funding. I have always used cash for rehab but it's all tied up now. What I'm finding in my search for this gem I hear of, is that all lenders, private or otherwise, want me to have a deal under contract first and then I apply for the financing for it. So Im supposed to do all the work to get a deal under contract and then I might not even get the financing? My passion is buying bank owned REO's, and we all know that bank owned means you must have proof of funds to even make an offer. So, I have to have a contract before I can get proof of funds, but I have to have proof of funds before I can make an offer so I can get a contract. Can you guys please enlighten me on this. I will look at the other articles on this subject in the meantime, which I just noticed. !!

[Shannon K.]

I am in the process of presenting my first few offers on houses now and I presented solid deals to a few lenders the past week... Yes, I did all the running around first to create a 10 page proposal detailing my experience, the properties, the numbers, comps--everything I could think of, and submitted to HMLs. I did not have the properties under contract yet, just an idea that I wanted to go after them. (To move forward past the pre-approval stage to get the loan, I would need them under contract).

In turn, they offered me a pre-approval letter without me even asking. Two pre-approval letters were property-specific from 1 lender and the other lender offered a "blanket" letter which pre-approved me up to a certain amount, but didn't list the specific property. Though this isn't a guarantee of lending, I was able to begin bidding on houses without them being under contract yet. If those deals didn't work out, I am still already in the lender's computer systems pre-approved for deals when I find the next one. (Unfortunately, I'm choosing not to use the HMLs I've contacted thus far because their numbers magically changed from what they originally told me once they realized I had more money available to put down, yuckkk).