Letter of Intent with Loan Fee - Is this Legit
Member since 2024 · 24 posts · 3 votes
Letter of Intent with Loan Fee - Is this Legit
Most Popular Reply
Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes
1yI took a quick look, @Torianne Baley:
1) With short-term treasuries now paying around 4.5%, guaranteed by the USG, why would anyone loan to you at 5%? HML rates are currently around 11% plus a few points. You can stop right there. On its face, this is a scam. Stop reading if you want.
2) I couldn’t guess what “There is a 6 months of grace period before interest payment begins” means.
3) They call their $3555 charge a “Loan Fee,” stated a few lines up as 2%. 2% of $235,000 (loan amount) is $4470.
4) Do you seriously believe the loan fee, “… IS 100% REFUNDABLE IF THERE IS ANY DEFAULT FROM THEPART OF THE LENDER OR IF THE BORROWER CHOOSES TO TERMINATE THE LOAN.”
5) It’s okay to pay an appraiser directly. Beyond that, sending upfront fees to a lender is not okay. Lenders get paid at closing.
Consider developing a better process to find and vet your lenders, Torianne. No one here will, or should, do your work.
19 Replies
- Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes1y
Some try to charge an up front fee. We only charge third-party fees like the appraisal and the borrower pays the vendor directly. We don't get paid unless the loan closes.I would be careful with a lender that charges anything but third-party fees.
- Member since 2024 · 24 posts · 3 votes1y
Quote from @Doug Smith:
Some try to charge an up front fee. We only charge third-party fees like the appraisal and the borrower pays the vendor directly. We don't get paid unless the loan closes.I would be careful with a lender that charges anything but third-party fees.
Thanks for your reply
Would you be interested in taking a look at the property details for your consideration/review. If this is okay, please shoot me a message
- Lender · Nashville, TN · Member since 2024 · 700 posts · 284 votes1y
No need to be paying an upfront fee to a lender.
As a lender it is our job to perform or we do not get paid.
- Member since 2024 · 24 posts · 3 votes1y
Quote from @Brandon Croucier:
No need to be paying an upfront fee to a lender.
As a lender it is our job to perform or we do not get paid.
Hi Brandon,
Thank you for your reply, definitely trying to avoid the scammers
I'm currently under contract and looking for reliable/credible lenders. May I send you over the property details for your purview
- 1yElias HalvorsonBusiness MemberHI · Member since 2024 · 225 posts · 130 votes
Definitely do not pay that upfront fee. Going private money will already cost you more $$ in closing costs, points, etc - but they should ONLY collect $$ if the loan closes. THere should not be any upfront charges where they make any money if you don't close. Scumbag company.
Elias Halvorson C2 Hawaii NMLS#1697041HI Branch NMLS#1244222 585 Reviews - Lender · Los Angeles, CA · Member since 2009 · 1k+ posts · 2k+ votes1y
I took a quick look, @Torianne Baley:
1) With short-term treasuries now paying around 4.5%, guaranteed by the USG, why would anyone loan to you at 5%? HML rates are currently around 11% plus a few points. You can stop right there. On its face, this is a scam. Stop reading if you want.
2) I couldn’t guess what “There is a 6 months of grace period before interest payment begins” means.
3) They call their $3555 charge a “Loan Fee,” stated a few lines up as 2%. 2% of $235,000 (loan amount) is $4470.
4) Do you seriously believe the loan fee, “… IS 100% REFUNDABLE IF THERE IS ANY DEFAULT FROM THEPART OF THE LENDER OR IF THE BORROWER CHOOSES TO TERMINATE THE LOAN.”
5) It’s okay to pay an appraiser directly. Beyond that, sending upfront fees to a lender is not okay. Lenders get paid at closing.
Consider developing a better process to find and vet your lenders, Torianne. No one here will, or should, do your work.
- Lender · Nashville, TN · Member since 2024 · 700 posts · 284 votes1y
Sure thing :)
- Member since 2024 · 24 posts · 3 votes1y
Quote from @Jeff S.:
I took a quick look, @Torianne Baley:
1) With short-term treasuries now paying around 4.5%, guaranteed by the USG, why would anyone loan to you at 5%? HML rates are currently around 11% plus a few points. You can stop right there. On its face, this is a scam. Stop reading if you want.
2) I couldn’t guess what “There is a 6 months of grace period before interest payment begins” means.
3) They call their $3555 charge a “Loan Fee,” stated a few lines up as 2%. 2% of $235,000 (loan amount) is $4470.
4) Do you seriously believe the loan fee, “… IS 100% REFUNDABLE IF THERE IS ANY DEFAULT FROM THEPART OF THE LENDER OR IF THE BORROWER CHOOSES TO TERMINATE THE LOAN.”
5) It’s okay to pay an appraiser directly. Beyond that, sending upfront fees to a lender is not okay. Lenders get paid at closing.
Consider developing a better process to find and vet your lenders, Torianne. No one here will, or should, do your work.
Now what would make you think someone here wouldn't be doing their due diligence
Again this is also a platform for new investors so there will be questions along the way
You should consider developing an understanding for the purpose of a legitimate forum
- Member since 2024 · 24 posts · 3 votes1y
- Member since 2024 · 24 posts · 3 votes1y
Quote from @Elias Halvorson:
Definitely do not pay that upfront fee. Going private money will already cost you more $$ in closing costs, points, etc - but they should ONLY collect $$ if the loan closes. THere should not be any upfront charges where they make any money if you don't close. Scumbag company.
Thank you, Elias!
- Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes1y
I think you meant to type was…
Thanks @Jeff S.for your free professional advice. You’re right. I should have figured out it was a scam because of every reason you listed. Thanks for saving me from getting scammed. I love this site and all the professionals that give away free advice with no strings attached. You’re part of what makes BP great.
I think that’s what you meant to type. Maybe I’m wrong and you just don’t appreciate your questions getting answered quickly for free by professionals. But if you’re not going to show appreciation there’s certainly no reason to shoot the messenger.
Now that’s he’s saved you $3,000 and told you how to avoid it happening in the future. You can move forward. Good luck.
- Member since 2024 · 24 posts · 3 votes1y
Quote from @Bill B.:
I think you meant to type was…
Thanks @Jeff S.for your free professional advice. You’re right. I should have figured out it was a scam because of every reason you listed. Thanks for saving me from getting scammed. I love this site and all the professionals that give away free advice with no strings attached. You’re part of what makes BP great.
I think that’s what you meant to type. Maybe I’m wrong and you just don’t appreciate your questions getting answered quickly for free by professionals. But if you’re not going to show appreciation there’s certainly no reason to shoot the messenger.
Now that’s he’s saved you $3,000 and told you how to avoid it happening in the future. You can move forward. Good luck.
No, no, no. What some people on BP don't seem to understand is to stop making the assumption that everyone is not working their best at this
if you have to provide negative comments or any sort of negativity when providing advice, then advice or recommendations shouldn't be your forté
As i mentioned before. If you have to provide negativity with your comment, then please refrain from commenting
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes1y
Quote from @Torianne Baley:
Quote from @Bill B.:
I think you meant to type was…
Thanks @Jeff S.for your free professional advice. You’re right. I should have figured out it was a scam because of every reason you listed. Thanks for saving me from getting scammed. I love this site and all the professionals that give away free advice with no strings attached. You’re part of what makes BP great.
I think that’s what you meant to type. Maybe I’m wrong and you just don’t appreciate your questions getting answered quickly for free by professionals. But if you’re not going to show appreciation there’s certainly no reason to shoot the messenger.
Now that’s he’s saved you $3,000 and told you how to avoid it happening in the future. You can move forward. Good luck.
No, no, no. What some people on BP don't seem to understand is to stop making the assumption that everyone is not working their best at this
if you have to provide negative comments or any sort of negativity when providing advice, then advice or recommendations shouldn't be your forté
As i mentioned before. If you have to provide negativity with your comment, then please refrain from commenting
This is my personal opinion but nothing he said was negative. There are opinions on these forums and people have a right to them and people may take it as criticism. real estate is not a business where everyone is friendly and just as you have shown from whoever was trying to scam you and has nothing to do with doing your best, its about being educated before moving forward.
His comment was to get a better process and do not rely on others. They are 100% correct.
The downside sometimes to forums is people have a superman complex and get the impression real estate is easy as they think everyone is doing it and just jump in without the knowledge or expertise. That never ends well.
7e investments53 Reviews - 1yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votesWith 21 posts, you don’t get to tell people what they can and can not post.
Quote from @Torianne Baley:
Quote from @Bill B.:
I think you meant to type was…
Thanks @Jeff S.for your free professional advice. You’re right. I should have figured out it was a scam because of every reason you listed. Thanks for saving me from getting scammed. I love this site and all the professionals that give away free advice with no strings attached. You’re part of what makes BP great.
I think that’s what you meant to type. Maybe I’m wrong and you just don’t appreciate your questions getting answered quickly for free by professionals. But if you’re not going to show appreciation there’s certainly no reason to shoot the messenger.
Now that’s he’s saved you $3,000 and told you how to avoid it happening in the future. You can move forward. Good luck.
No, no, no. What some people on BP don't seem to understand is to stop making the assumption that everyone is not working their best at this
if you have to provide negative comments or any sort of negativity when providing advice, then advice or recommendations shouldn't be your forté
As i mentioned before. If you have to provide negativity with your comment, then please refrain from commenting
- Lender · Fountain, CO · Member since 2022 · 124 posts · 32 votes1y
There are plenty of use cases where lenders require upfront fees. However you're looking at a 5% rate for an investment property? Investment property financing is all we do and we beat most peoples rates and we are not even close to 5.0%.
- Member since 2024 · 24 posts · 3 votes1y
Quote from @Chris Seveney:
Quote from @Torianne Baley:
Quote from @Bill B.:
I think you meant to type was…
Thanks @Jeff S.for your free professional advice. You’re right. I should have figured out it was a scam because of every reason you listed. Thanks for saving me from getting scammed. I love this site and all the professionals that give away free advice with no strings attached. You’re part of what makes BP great.
I think that’s what you meant to type. Maybe I’m wrong and you just don’t appreciate your questions getting answered quickly for free by professionals. But if you’re not going to show appreciation there’s certainly no reason to shoot the messenger.
Now that’s he’s saved you $3,000 and told you how to avoid it happening in the future. You can move forward. Good luck.
No, no, no. What some people on BP don't seem to understand is to stop making the assumption that everyone is not working their best at this
if you have to provide negative comments or any sort of negativity when providing advice, then advice or recommendations shouldn't be your forté
As i mentioned before. If you have to provide negativity with your comment, then please refrain from commenting
This is my personal opinion but nothing he said was negative. There are opinions on these forums and people have a right to them and people may take it as criticism. real estate is not a business where everyone is friendly and just as you have shown from whoever was trying to scam you and has nothing to do with doing your best, its about being educated before moving forward.
His comment was to get a better process and do not rely on others. They are 100% correct.
The downside sometimes to forums is people have a superman complex and get the impression real estate is easy as they think everyone is doing it and just jump in without the knowledge or expertise. That never ends well.
And I quote, "No one here will, and should, do your work" - negative assumption
- Member since 2024 · 24 posts · 3 votes1y
Quote from @Don Konipol:
With 21 posts, you don’t get to tell people what they can and can not post.Quote from @Torianne Baley:
Quote from @Bill B.:
I think you meant to type was…
Thanks @Jeff S.for your free professional advice. You’re right. I should have figured out it was a scam because of every reason you listed. Thanks for saving me from getting scammed. I love this site and all the professionals that give away free advice with no strings attached. You’re part of what makes BP great.
I think that’s what you meant to type. Maybe I’m wrong and you just don’t appreciate your questions getting answered quickly for free by professionals. But if you’re not going to show appreciation there’s certainly no reason to shoot the messenger.
Now that’s he’s saved you $3,000 and told you how to avoid it happening in the future. You can move forward. Good luck.
No, no, no. What some people on BP don't seem to understand is to stop making the assumption that everyone is not working their best at this
if you have to provide negative comments or any sort of negativity when providing advice, then advice or recommendations shouldn't be your forté
As i mentioned before. If you have to provide negativity with your comment, then please refrain from commenting
That's because I'm busy out here working deals. And what is this air of superiority in this place..so in your little internet world 21 posts means you're less of a human being, gotcha, again that's in your little internet world
- Member since 2024 · 24 posts · 3 votes1y
Quote from @Jesse Holsapple:
There are plenty of use cases where lenders require upfront fees. However you're looking at a 5% rate for an investment property? Investment property financing is all we do and we beat most peoples rates and we are not even close to 5.0%.
Thanks, Jesse! - 1yErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
I think the dead giveaway is the rate and points. 5% is too low for anyone to lend now. You will make a better return with less risk keeping your money in a CD or bond.
But in terms of the upfront fee, this is actually common in a commercial loan. Although legitimate lenders will refund this fee partially or in full if you decide to cancel or if the loan is not approved. Not really common in the 1-4 unit residential space.
I would suggest shopping it around a little more until you find a lender that offers reasonable terms and has a positive reputation. It is also more common in the private money space, to bait and switch. I see it all the time.
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