Broker Builder from Builders Capital Mortgage

Breaking News:

Builders Capital is now lending in Utah and Colorado -- all the same great programs, now available in more states! Tell your colleagues in WA, MT, OR, ID, CO, and UT to submit a loan scenario today at www.builders-capital.com/submitaloan_form.asp.

Owner-Builder Loans

As we have pointed out in previous newsletters, it's always a good idea to diversify your product base -- and it's an even better idea when hard times come. In this issue, we talk about a type of loan that few brokers carry and in which even fewer are experts -- the owner-builder loan. It may seem like there isn't a big market for these loans. However, several factors speak in favor of carrying them.

Steady Demand

Census data show that demand for these loans has remained fairly consistent throughout the years. In our experience, this is a feature of the independent cast of mind demonstrated by owner-builders, who tend to find ways to get done what they want done regardless of external circumstances.

Source: United States Census.

Less Competition Means More Opportunity

The number of brokers providing these loans is still relatively small, as they are somewhat more complex than typical home loans and they are considered non-conforming. With a committed partner like Builders Capital Mortgage guiding them through the process, most brokers don't find them more demanding than other types of loans. With careful underwriting and a financially stable lending partner, these loans remain highly profitable.

"Built by Owner: With do-it-yourself homebuilding becoming more popular, you can help clients fund their own projects," Scotsmanguide.com: www.scotsmanguide.com/default.asp?ID=1116

Less Risk than Spec Loans

Owner-builder loans differ from spec loans in that there is no risk that the property will not be sold-the builder takes ownership at the end of the building process. This also gives you more insight into their individual situation and the ability to analyze their ability to get long-term financing after the term of the construction loan is complete. And, of course, the owners benefit because they do not have to pay the fees and overhead that come with hiring a builder.

A Strong Partner Makes the Difference

If you decide to add owner-builder loans to your practice, carefully consider your financing provider. Success in this field requires experience, knowledge, and a more personal touch than everyday loans. Builders Capital Mortgage is a strong choice; we have always specialized in construction financing, including that for owner-builders, and we know how to underwrite and service these loans. Our in-house draw process means that our local team both funds and services loans. You always have the expertise you need, just a phone call away. Our low down-payment requirements (as low as 5%) give owner-builders more financial leverage to build the home of their dreams, and Builders Capital Mortgage is always willing to consider situations that other lenders might not. For example, under the right conditions, we can fund construction that is already in progress.

"Build Your Dream House Now: It's the best time in years to take your blueprint off the drawing board and construct it for real," Money Magazine: http://money.cnn.com/2008/03/10/
real_estate/build_home.moneymag/

FEATURED PROFILE:
Angie Stillman, Loan Source Funding

How long have you been a mortgage broker and why did you choose this industry?

A friend in the business lured me in and thought that I would enjoy it. It started as a part-time business and it turned out I was good at it.

What do you like best about being a mortgage broker?

The challenge and the variety. Each case is different-they may look the same, but their family, personal, and other goals present a new twist. And, there are always new guidelines and rules to consider. I like the challenge -- it's like an obstacle course!

What made you decide to send your first loan scenario to Builders Capital Mortgage?

I started using Builders Capital in fall of 2006. I've made a bit of a niche working with owner-builders and small builders, including high-end custom homes and townhomes, and Builders Capital provides financing for those who don't want the hassle of working with a typical large bank or don't meet typical lending criteria.

What do you appreciate most about Builders Capital Mortgage?

The nice thing about Builders Capital is that you submit a project and then there's an open discussion with them -- they treat it as problem-solving rather than just a denial. They're able to see the strengths of each borrower and each file and help make projects happen -- you're not just a number.

Also, the service is great -- you have someone who is local, who answers the phone and actually calls you back.

How do you seek the best value for your builders?

Banks have tightened up a lot of the lines of credit that builders used to utilize. For newer builders, they can't access the credit lines, and they have to use alternate financing. The cost may be a little higher on paper, but if it's the difference between getting a project done or not, it's definitely worth it.

With private builders, we've taken those with some bumps in their credit history and gotten their project funded using Builders Capital. During the time the project under construction, I work with the owner-builder to get their score up so that when it's time to seek permanent financing, they're eligible for the best loan possible. For example, I took a client with a credit score in the low 600s, got him financing for an $850,000 owner-built, and at the end got him a 30 year fixed at 6.25%, which he never would have qualified for at the beginning.

What has your experience been with Gerri and the account management team?

Every borrower has strengths and weaknesses -- they may have great property but can't verify income, they might have cash, or they might be owner-builders, whom banks just don't usually finance. I have direct access to Geri and Erin, and we can usually make projects work.

How responsive has Builders Capital Mortgage been to the unique needs of your builders?

I get preapprovals in 24 hours. They're honest about what they can and can't do and they follow through.

Are you participating in Construction PRO or our PRO-Funds program? What have you found to be most beneficial to date?

It's going well. I just started -- I got a piece approved and did my first reimbursement invoice. It's very easy to use and big help in a challenging market.

What other ways can Builders Capital Mortgage help you grow your business?

Sponsor a media segment on the news about what a great time it is to build and buy a home! I'd also like to see them continue and expand the Construction PRO program beyond print ads.

April 2008

Featured Profile:
Angie Stillman

Angie Stillman, Loan Source Funding "Banks have tightened up a lot of the lines of credit that builders used to utilize.... We've taken those with some bumps in their credit history and gotten their project funded using Builders Capital." more >

Get the Low Down on Construction Loans!

One of the top reasons that builders fail is due to poor cash flow. How can you help your builders stay liquid? Learn how to help your builders succceed at the Builders Capital webcast “Get the Low Down on Construction Loans”.

Wednesday, April 23, 2008
Construction PRO Event (Webcast)
2:00 pm PT online
Learn more at www.builders-capital.com/about/
news.asp or register today at http://webcasts.builders-capital.com.

Golden Nugget:
Tips for Builders

Builders Capital can loan directly to LLCs and corporations owned by builders.