The Loan Process

Private money mortgage loans go through a process which is very similar to that of a conventional loan. The two main differences are in the source of the funds and the time it takes to complete a transaction. Most conventional loans get their money from a lending institution and usually take 6-8 weeks to close. Private money lending comes from an individual or group of individuals and usually closes within 2 weeks.

Because we complete the major steps of the loan process in house, we are able to move the loan process along rather quickly. A general timeline for the loan process is as follows:

• A loan comes in from the borrower
• Escrow is opened (For a detailed explanation of escrow: click here)
• We complete all the necessary due diligence to make sure that the loan is viable. (This due diligence includes obtaining a title report, an appraisal or real estate comparables report, a loan application, a credit report, and any other necessary documents)
• The loan summary is sent out to investors who fall under the criteria of the loan
• If the lender has further interest, a non circumvention and privacy agreement is sent out for signature
• Upon receipt of the non circumvention and privacy agreement, the lender receives a full file (A full file consists of the loan application, credit report, appraisal or comps, title report, and photos)
• The lender does their internal due diligence and decides whether to commit funds within 3 business days
• A commitment to fund letter is received in our office
• Vesting information for the mortgage and note are gathered
• Wire transfer information is delivered to the lender
• The lender reviews the mortgage and note (as drawn up by Mid Pac Funding's attorney)
• Once approved, a signing is scheduled at the escrow company for the borrower
• If multiple lenders are involved, the lender agreements are reviewed and signed by all lenders and collected in our office
• Insurance is collected from borrower's agent (naming lender as additional insured)
• Lenders wire funds to escrow
• Escrow funds and records the mortgages (at which time interest starts)
• An amortization schedule is sent to each lender
• Lender(s) collect(s) monthly interest for the term of the loan

As stated above, this process usually takes around 2 weeks.  However, this can get slowed down when waiting for final documentation from borrowers or a slow down in the wire transfer of money.  We will always try to keep you informed on the progress of your loans.

Feel free to contact us if you have any questions.

Click on the following link for a glossary of real estate terms.