Hard Money Terms Sheet... 12% and 2pts?

Question

Howdy folks: Looking for a 2nd set of eyes on a hard money terms sheet... Can I get a few thoughts on fair value? Is this similar to what others are seeing? First experience w/ hard money.

Loan amount: $27,000

Interest Rate: 12%

Term: 3-months

Origination Points Owed by Borrower: 2 points ($540)Monthly Payment (30 year fixed amortized): $272 ($27,000-$540=$26,460)Points payable at payoff: 0 points ($0)

Prepayment Penalty: None

Loan Extension: 3-months

Loan Extension Points: 2 points ($540)

Chris Mason · Answer

For such a small loan amount, you're lucky to find anyone even willing to do it.

Jay Hinrichs · Answer

I half expect this is not be a real lender..  no one can stay in business charging 540 dollars in loan fees ..  unless there is 3k in junk fee's which there could easily be.. most borrowers only fixate on points and interest and then when they get their settlement statement and see 2 to 3k in junk fees to the lender.. they just go with it..  NO way a lender can stay in business making those kind of loans.. a lender needs minimum 3 to 4k per file any way they can get it.. no matter how small the loan is.. this is why minimum loans are usually 75 to 100k so they can make a few bucks..  I would be very suspicious of this..

Michael Noto · Answer

@Ryan Clements Is this hard money lender a big operation? Do you know people who have used them before with success? The only thing I would be wary of is you are getting what I would consider to be average hard money rates and points on a loan amount so low. Just make sure they are 100% legit before going forward. I have my reservations based on my experience and the numbers you provided.

Anthony Beckham · Answer

Most easy to find hard money lenders seems to be 10-12% with 2-4 origination points.

Depending on experience, credit, etc. is when you'll see the lesser numbers.

I'm sure there are guys on here that pay much less, but I would say the above seems to be pretty close to the standards most are advertising.

Account Closed · Answer

What the heck are you going to do in 3 months ?? Not very useful

Kevin M Finley · Answer

You're missing junk/ doc prep fees. I'm sure they're in there somewhere. I only have one lender that will do sub-$50k loans and they are six month terms at 5 points, 15% interest only plus $1900 in junk fees.

George Despotopoulos · Answer

The fact that you're getting a short term loan @ $27k for only 12% and 2 points is a win. The only negative is it's 3 a month term and you'll need to pay an additional 2 points to extend to 6. With that said, it's very hard to get a 6 month interest only loan, so it could be worth the 4 points.

Nate Marshall · Answer

12 and 2 is very common. With experience you can 10 and sometimes under. Points 2-4.

Jerel Ehlert · Answer

Looks pretty normal in the metro areas of Texas (ya'll forget how local the markets really are).  <$50K typically have some base fees to make it work for the HML.  This sounds more like a private lender.

Matt Chavez · Answer

I've been calling some hard money lenders and 12% & 2-4 points seems to be normal.

Hard Money Terms Sheet... 12% and 2pts?

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