We are about to use HML for the first time.
We got multiple offer by lenders, most of them include fees we do not understand, such as THEIR closing costs and fees.
For example: 12% interest, 2 points + 3.5% 'OUR CLOSING COSTS' + Service fee of $749.
Another example: 10% interest + 'The range of points and closing fees will be approximately $7000.00 to $8000 . Included in this would be title, underwriting and document prep fees.'
Is this normal and typical? What HML has to do with TITLE fees and what is 'THEIR' closing?
HMLs are going to try and make $5000 per Deal, minimum. They’ll take less for client they have confidence will return.
The ‘closing fee’ usually goes to the employees who close the deals and deal with all the nuance/files/lawyers. It pays some bills.
Points goto sales and company principals.
We’re considering moving to a flat fee on deals under $80k and $150k ARV.
Not sure why people think quick financing to help you make $20-40k on a house should be super cheap when the lender is risking a lot of money on a person with low documentation.
It ain’t always pain free, but for investors who know what they’re doing it’s not that big an expense. If you don’t know what you’re doing it can add up quick.
OURS is the lender.
THEIRS includes the additional third party charges from others required to close this transaction... title company for sure (closing + lenders title insurance) and it's possible that outside attorneys are preparing your loan docs.
Appraisal, outside attorney, insurances, etc.
Even if these things are in house it’s not like there’s no associated fee. It’s getting paid one way, or another.
I️ know an attorney who lends and he doesn’t have legal fee. He also has funding limit of $5mil. Meaning once he hits it he can’t loan until he gets it back. That means if you’re borrowing to flip 10-20 houses a year he’s not your guy. He doesn’t have the liquidity and can’t get over leveraged through one borrower.
So the fee is less but you’ll be looking again.
@lukas is this your first deal? It’s a lot of risk working with newbies as most lenders may not work work first time flips.