Hi There, I have been a contractor for over 30 years but I am still fairly new to flipping houses. I have a private lender that is willing to lend me 200 K. We haven’t figured out the details yet and I’m wondering how exactly the percentage structure would work.
Here's what I pay:
2 points/ 12%. interest only. All payments and points paid back with principal.
6 month term. additional 6 months granted for additional two points payable upfront.
90 day minimum interest. Depending on your state laws you can call this a prepayment penalty.
So if I borrow $100,000 for the full 180 day (6 month) term, my payoff would be $100,000 + $2000 (2 points) +$6000 (interest). Your interest calculation is rate/360*days*principal.
Like I said, this is what I pay, but follows the same formula as most.
Thank you Kevin, this was very helpful!