How do I go about protecting my down payment when getting private money from a lender? Do I put it in escrow?
The lender doesn’t receive your down payment.....the closing agent/title company does, a day or so before closing.
@Wayne Brooks The lender processing fee is what meant. I just don’t wanna send the money and find it’s a scam
@Terrez Jarrett Well, that’s a whole different analysis. Typically you may pay a small application fee, but processing and origination fees are paid at closing.
For a start;
How did you find this lender?
How much is the fee.
What rates and terms are they supposedly offering
Have you looked in county records to see if they’ve actually made any loans
Have you supposedly already been approved and what documents have/do they require for approval?
@Wayne Brooks I applied for private money on connected investors for a flip that I was about to sign contract on and close on. This lender emailed me. The loan was asset based.
48 month term on $100,000.00, 5% per annum interest
loan transaction fee $1,520, monthly payment $2,302.93, cumulative payment 110,540.81
I needed to send valid ID as proof of identity and copy of articles of incorporation because I have a business.
The transaction fee would have to be paid prior to closing.
@Wayne Brooks the lender is out of Dallas TX and I was preapproved. I didn’t check county records when I should’ve but I didn’t think to.
@Terrez Jarrett Total absolute scam...No One lends flip money at 5%, period.
I’m guessing you didn’t have to provide any kind of real verified financial info, or have a credit report pulled, to get “preapproved”?
You send the $1,520 fee in, you never hear from them again.
@Jason D. Yes he was. I noticed the email address changed after about 4 or 5 emails sent. I´m glad I trusted my gut! @Wayne Brooks I figured it was a scam. It just didn´t seem right. I was not required to provide any other documentation besides what I already told to you. The loan wasn´t even asset based it was basically just a loan! Thanks guys for the support! I definitely appreciate it!
@Terrez Jarrett Can you explain why it is private money? What indicates it is private? There should be points at the back end. No transaction fee to pay. As the other replies stated - how did they pre approve you without your credit? Not good.
ABL means you own the asset free and clear. Do you mean your loan was against your fixer upper?
Account Closed The lender presented himself as a private lender on all his documentation and emails. There were no points and the transaction fee was $1,520.00. There was no credit approval (which I didn´t see as a red flag because I have had lenders do that before and had no problem) and I he stated in email that I was approved upon the signing of Loan Repayment documents ( which I didn´t sign because I am not handing over $1,520 dollars for it to disappear with no protection). Also, There was nothing in writing stating that it was asset-based.