Clearly Define your Scope of Work
Clearly defining your plan for the property is one of the most important things to do early in the loan application process. Most lenders will obtain an appraisal to validate the as renovated value of your property and ordering an appraisal correctly (and early) is important. When it comes to the appraisal, both you and your lender are relying on a third party to accurately value your property based on future conditions, so providing accurate renovation plans to the appraiser is crucial. Think of it this way – if the appraiser can’t quickly and clearly understand your plan, how can you expect them to provide the value you need, in the shortest time possible?
In our experience, providing a detailed scope that identifies each item of work to be performed, as well as the associated types of finishes, is the most efficient way to evaluate your project, and we’ve structured our Renovation Draw Schedule to help you provide the necessary level of detail. For best results, be prepared to provide this documentation early in the loan process.
Showcase Your Experience
Your lender wants to know if you’ll be able to successfully manage your fix and flip project, so demonstrating your experience is important. Before submitting your loan, put together a detailed list of your past projects – here’s a link to a template – so that your lender can understand your history.
If you’re new, or are taking on a new type of project, finding a contractor that has significant experience can help, but understand that your lender may require you to put more of your own money into your projects until you’ve gained the necessary experience. Either way, providing an accurate picture of your prior experience can help your lender accurately structure your loan request.
Closely Review Your Lender’s Requests
At multiple stages during the loan application process, your lender will provide you with lists of the documents needed to approve and close your loan. Review these lists closely and ask questions if you don’t understand any requests. Just as you are relying on your lender to meet your closing timeframe, your lender is relying on you to provide documents in a timely manner. Being proactive with your documentation is one of the best ways to be sure that your loan closes on time.
Have More Questions?
See our Borrower FAQ page for answers to more commonly asked questions.