New lender question???

Question

Has anyone used

MG Servicing Incorporated

For lending? I’m new to flips and I can’t find a lot of information on them. 5% rate seems too good to be true. What am I missing?

Chris Seveney · Answer

@Tyler Underdahl

Yes it is too good to be true

Easy way to find out is to tell them who your escrow and title company will be. If they say no escrow company then run

Also do not give any upfront fees or info out to them that is personal early on

Doug Smith · Answer

Don't take my word for it, look this up. The Federal Funds Rate...the rate at which Banks borrow from the Fed, is 5.25%-5.5%. Lending to a flipper is much riskier and carries a much higher risk premium than owner-occupied loans, which currently carry a National Average according to unbiased publication Mortgage News Daily, of 7.13%. Why in the world would a bona fide lender charge less for a statistically riskier loan that banks can borrower let alone owner-occupied real estate rates. You're not missing anything.

Kevin Albrecht · Answer

As an FYI- I looked up when their website was published,  Jan '24.  On their website says they have been doing these loans since 2014!

Tyler Underdahl · Answer

Yeah, we are going a different direction.

Joe Dillamore · Answer

@Tyler Underdahl It's a scam

Preston Dean · Answer

a 5% rate on a fix/flip is too good to be true. You can only buy the rate down 2 points with an investment loan and I don't see how 5% on an investment is possible. You for sure will be charged fees, so double check that!

Sophia Buesing · Answer

I haven't heard of them. Sounds way too good to be true. For hard money 10-13% is pretty standard right now. Would love to connect! We do a ton of real estate happy hours in DFW.

Jonathan Soto · Answer

i'm a lender, something isnt right for a bridge loan to be 5%. havent heard of them but if you would like me to review their terms they giving you i can

Robin Simon · Answer

Good comments here - your instincts are absolutely correct, something is not right offering hard money at that rate

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