hard money lending Q's

[Dan Marro]

Hey guys, question about hard money quote, please advise:

My quote for a loan of ~ $168,000, my first flip

9.5% interest rate (I understand)

Closing Costs

- 1.5% Origination Fee (I understand)

-  $1,495 flat rate Processing fee (I understand)

- $5,000 in 3rd party closing costs (I don't understand)

 In closing costs, I understand they charge you points up front, which goes to title transfer, etc. But I feel like the $5,000 in 3rd party costs is duplicated. That would be around 3 points worth in addition to the 1.5 points on the orig. fee and the $1,495 flat fee. Is this standard? I thought closing costs work out to only 2 - 3 points total, whereas these closing costs work out to around 5.36 points total.

 Thanks for your help,

 Dan

[Aaron K.]

Not exactly sure because I can't see the contract but I would assume that your hard money lender is selling the note to another investor (many do) and that fee is to cover that.  It could also be their estimate to cover standard closing costs through escrow and title but I doubt it.