Need Guidance: Hard Money Lender Quote
Hello Everyone!
First time using Hard Money lending. I need your advice to see if the terms are fair from this local hard money lender.
The want to set me up with a $500,000 LOC
Personal guarantee
-Interest: 9.99%
-90 day interest minimum
LTC - up to 85% - Down payment required is 15% of total acquisition & rehab cost
Max loan amount is 70%. Only lend what I need.
3 points
inspection fee: $450
Processing fee: $895
Appraisal fee: $595
Rebab escrow fee:$535
-Rehab - 100% funded by lender
-3 Draws paid on completion of each phase of rehab.
Is this a fair deal?
Points, down, interest rate come down after I have done 3 deals with them.
down to:
2 points
10% down
9% interest rate
Most Popular Reply
It's fine.
I don't do hard money loans, but I talk to folks on the back end refinancing out of it.
Something that's crystal clear to me based on client feedback, with HML, is that you're just swapping rate/fees/terms for reliability (or lack thereof). So, while I am 100% certain you can find a "better quote," it's probably just going to be at the cost of a greater % chance of the lender pulling the rug at the 11th hour.
About six months ago I helped someone refinance out of a HML at about 7.5%, and yes it was true hard money. It took us 3 months to get the payoff demand and verification of mortgage. So even though there was no "official" minimum period of them collecting interest, it sure as hell felt like it to that borrower, lo and behold we finally got it, and were able to close the refi, mysteriously right after the 12th month passed since they took it out, that must have been an "odd coincidence"... ahem.
There are honest and forthright HML out there, to be certain. And, not so honest as well.