When you want to buy a new home, if you’re like most people you seek out financing offers to secure the purchase price of a home. This practice of financing a home dates back to the 1920s, when mortgages were typically handled by life insurance companies. Back then, it was difficult to secure an entire loan and down-payment restrictions were much tighter. Today, pre-qualification is a much smoother process and one of the first things most people tackle out of the gate when they shop for a home.
That’s where companies like Network Capital come in. Network Capital, based in Irvine, Ca, is a direct lender that offers its clients pre-qualification with a twist. It’s called “Same as Cash” and it’s a new method of reassuring the seller that the buyer will be able to pay the sale price of the home up to a certain amount.
If you’re shopping for a home, you’ll find quite quickly that sellers won’t take your offer very seriously if you don’t have a pre-qualification letter. This statement is a signal that you have spoken with a lender, who has agreed on preliminary terms to lend money to you. Typically this letter agrees up to a certain amount, and it may contain certain provision the lender has agreed to (such as a down payment requirement, or verified proof of income).
The power these letters hold is certainty, but they can still be overridden by someone who comes in with a higher bid or who is further along in the process.
Network Capital changes that landscape by offering a guarantee with the solidity of a cash purchase. The seller can close the deal much faster, which appeals to investors especially but everyone loves to close a deal quickly.
Typical escrow takes about 30 to 45 days to resolve. With the Network Capital program, they say it can be completed in as little as ten days. That’s a tremendous breakthrough for mortgage lending, and for home ownership.
The reason that Network Capital can deliver on this turnaround is because of their efficiently underwriting the loans they finance. They are known as a “direct home lender”, which means there aren’t middlemen involved in the process. Because much of the paperwork is done online, everything is filed efficiently and the lender can deliver on very tight schedules.
Underwriting is crucial because Network Capital takes an immense risk if it fails to properly vet a loan it took ten days to finance. That short turnaround time leaves very little room for error, so the company spends a great deal of time getting to know its clientele and deciding which loan program will be of greatest use to each individual situation. Since every purchase is different, Network Capital puts a great deal of effort into outreach. It even gathers paperwork for its clientele, which is often one of the more time consuming aspects of the process.
A loan that is backed by some of the same guarantees that a cash purchase would have gives the buyer quite a bit of power. It shortens closing time, and gives the seller assurance the loan will be financed properly.
Home buying is extremely competitive. Interest rates are low, inventory is drying up in hot spots and demand is exceedingly high. Having the ability to close in ten days saves the buyer a ton of headache, but it also secures the purchase. There is no feeling worse than walking away from your dream home because you were beaten by someone with a higher down payment or a shorter closing time.