Do legitimate private lenders ask for upfront fees?

Question

I realize I am a newbie but figured I'd get better advice on this thread. If you can tell a illegitimate lender by their "upfront origination loan fees" can you explain what are the requirements for private lenders? I even had a guy send me copy of his (or somebody's) drivers license and corporate papers. He asked for $760 upfront origination fees. How do you identify the good ones? You need loans to do this and isn't that the reason for private lenders instead f banks. Just trying to figure it out.

Robin Allen · Answer

Thank you. What I heard is that upfront origination fees are a no - even with private investor. That I should expect appraisal and similar fees with others tucked into loan. First straight answers I have received.

Robin Allen · Answer

My gut feeling said "Why would he send his license" but also gave me a better feeling of it actually is a person. I stopped short, but not by much. Is the only way to meet Private Money Investors through Investment Groups?

Nick C. · Answer

It's already been said but I'll just say it again to reiterate - NO, never pay upfront fees to a lender, regardless of the irrelevant identification document they send you.

Tchaka Owen · Answer

@Robin Allen - the answer in NO.

If you're willing to pay upfront fees, let me PM you my address because at least I'm being straight enough with you to let you know that I'm going to go to the Bahamas for the weekend on your dime.

If "upfront" means on the HUD at closing, you're fine. But otherwise, NO.

Jacob Villalobos · Answer

No

Tchaka Owen · Answer

Shaun Weeks is correct that you may pay appraisal and credit fees upfront (particularly the former as that goes to a 3rd party), however that's on conventional lending. You said "private lender" and they don't do appraisals. Doesn't matter what they send you, if it's not on the HUD (or CS), it's a NO. You won't see that person again. At least I'll be kind enough to send you pics from Nassau. :-D

Kyle J. · Answer

Sending you a copy of a driver’s license is actually another sign that it was a scam. It wasn’t their license you can be sure (real lenders don’t do that). They sent it to make you feel better about dealing with them and hopefully more likely to pay their scam fees.

Shaun Weekes · Answer

The only fees you should ever pay for are an appraisal and or credit report out of your pocket.  Everything else will be included in the loan.

Greg Scott · Answer

To answer your question, yes, some do or can.

Its been a few years but I used to pay 2 points (2% of purchase price) for a hard money loan on a run-down SF rental.  In recent years interest and fees have come down so I'm not sure this is still the case.

In your situation it sounds strange.  I would be more worried about that than the fact that they have an origination fee.  Meet them in person and ask for references.  Ideally you already have a reference from someone you know.

Do legitimate private lenders ask for upfront fees?

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