Bank Financing Vs. Transactional Funding: Which Is Better When Double Closing A Real Estate Deal?

1. Bank Financing Vs. Transactional Funding: Which Is Better When Double Closing A Real Estate Deal? Real estate wholesaling is a lucrative business, but often success hinges on the wholesaler’s ability to secure attractive financing. Different lenders offer a range of financing options, but some are better for double-closing than others. For example, a wholesaler can get flash funds from a transactional lender, or they could get financing through a more traditional lender, i.e. banks and credit unions. Let’s explore the differences between transactional funding and traditional financing throughout the sections below to see which is truly better for double-closing. What Is Double Closing? Double closing is a real estate strategy that involves two independent real estate transactions occurring on the same day. The first one will happen between the home seller and the wholesaler, while the second transaction will be between the wholesaler and the investor or the end buyer. Down Payment A down payment is almost always a requirement for traditional financing. Usually, you need to pay up to 20% of the selling price as a down payment. But double closing requires that you have the money immediately, so if you can’t put up a down payment, you won’t be able to close the deal and it may end up being a costly mistake. Transactional funding, on the other hand, ensures you have 100% of the money you need to close a deal. Approval Pre-approval is really only for buyers of certain residential properties; this certainly isn't extended to those who buy properties off the MLS. Traditional lenders usually want to see that the house has been owned by the same person for at least 90 days; if this isn’t the case your chances of getting a mortgage for the property go way down.

2. Transactional financing lendersdon’t have such restrictions. You can get money for the property instantly so you can quickly sell it for a nice profit. Loan Disbursement When applying for a mortgage through a bank, you’ll need to go through the underwriting process, which always involves an appraisal. This process can take up to three months. But those doing double-closings can’t wait this long. So if you get transactional funding, you’ll have the money to purchase the property instantly. And there’s no lengthy approval process. Eligibility Criteria A good credit score and steady income are prerequisites when you need financing from a traditional lender. If you have a history of missed payments, the chances of you getting a mortgage go down. Transactional funding, on the other hand, doesn’t have such requirements. You can get the funds you need quickly after providing details of the deal. Funding Costs When you get a loan from a traditional lender, you’ll need to pay appraisal fees, origination fees, and insurance fees. But to secure funding from a transactional lender, all you need to do is pay 1% of the selling price. Are you a wholesaler who’s looking to double-close a hot real estate deal? Get flash funds from us now! At DoubleClose.com, we provide the best transactional funding for double-closings, and we ensure a seamless process. Resource Box The author is a transactional lender who helps real estate wholesalers get the funds they need to double-close. To learn more, visit https://www.doubleclose.com/.