BiggerPockets

I recently came across Palm Financial in Florida and they told me about a prety intersting commercial bridge loan program that they supposedly offer. I've never used a hard money lender especially one for commercial. Has anyone ever heard of this company or knowif up front fees are common? I'm not used to paying up front fees to a lender just for the privilege of telling me whether or not my project qualifies for an approval under his terms.

Let me clarify - I'm talking about the closing when you buy the property, not the flip when you resell it. Some lenders charge points up front but it's charged at the closing WHEN the deal funds.

In the "commercial" lending world it is usual to have up front fees. This is due to the fact that the company believes you are a qualified investor and are ready and willing to move on a purchase.

The fees are typicaly for the appraisal, (commercial appraisals are much higher than residential, some start at $2500), and other aspects related to the purchase.

Sometimes the lender will refund part of the fee if the deal falls through as not eveything is done at one time. It can take at least ninety days to close a true commercial loan. It is very different than a residential purchase.

I am told by the mortgage brokers we work with that we are in the minority of commercial lenders in that we require no upfront fees (the borrower pay appraisor directly). If you decide never to pay an upfront fee you still may be able to get your deal financed but you will eliminate many potential lenders who might have more favorable rates or terms.

I think that an informed decision is called for here. If the fee is reasonable, and seems like it is covering lender's expenses, AND your research on the lender shows that they are legitimate, then I would pay the fee if I had confidence in my deal and in the lender's ability or willingness to fund.

I definetely would not pay upfront fees that wind up in a mortgage broker's pocket, or that are commitment fees that represent profit to the lender rather than expense reimbursment. The exception might be some banks that do require a commitment fee - however I would seriously consider other sources before spending a significant amount of capital on upfront fees.