All Forum Posts by: George Despotopoulos

A lot of people are correct here that it's questionable whether a bank will follow-up. Regardless of how unlikely it is, the fact remains that it's a possibility. To act counter, or in breach of your loan agreement, is not the best thing to do. Lenders have specific guidelines for a reason. You may not have gotten the interest rate or terms you did had the facts been different (meaning it's non-owner occupied). 

Again no lender wants a loan to be in default, or call a loan, especially if it's performing well. Perhaps, you can call your lender and ask a general question regarding this and see their response. From a regulatory standpoint going from owner occupied to non-owner occupied is more relaxed so maybe they do not mind. 

@Andrew Diamond you usually need to have a 600 credit score as anything below signals something along the lines of a recent foreclosure, bankruptcy, etc.. There are hard money lenders that will still consider you if you're under 600. 

You definitely have to put money down on the purchase price. Usually hard money requires 20% down and have a minimum of $50K (others have a minimum of $75K or $100K). The interest rates can be anywhere from 10% to 14% generally. I would ask around and compare. Your experience level in real estate investing will play a role as will the LTV or LTC: the higher loan amount you take the higher the rate.

@Tony Anthony without knowing much more than your two posts here I'm going to say it's safe to say he did not find 100%. Especially in New York City, where property prices are rather high as are construction costs. 

Regardless of the NYC market, 100% financing, excluding construction, is extremely rare. If you're looking to fund both your purchase price AND the construction, well that's even more so rare. It's not worth the risk to a lender. The most a lender will make is 3-5 points at closing and 14-15% interest rate. I don't think that is in any way worth their time when they're lending out above $50K for full LTV/LTC...just does not make sense to do so. The borrower has 0 skin in the game and the upside for the lender is minimal.

@Jeff S. gives you some great advice here. I would definitely look into a lender that operates in the manner and with the docs he laid out. The deal should be as risk-free as possible and having a lender going through the proper channels is necessary. 

Hey, I'm not a tax professional nor in Illinois, but I believe you should be mindful of the imposition of City and State transfer taxes here as well. 

May be able to help point you in the right direction @Abou C. can you give us a little more info on what you're looking for? 

Things such as the loan amount you're seeking, the amount you have to put down, the type of property you're looking to finance, and your strategy (buy & hold, buy/rehab/refi, fix &flip, etc.) would be helpful to narrow down possible choices for you.

@Hilary Nwakor welcome to the forum! 

As others mentioned, a point is a % of the loan amount. BTW! 

4 points in your scenario usually mean 4% origination fee. This is the fee the hard money lender charges you to make the loan, it's basically like their commission. You usually pay this at closing. When you close you would get $100,000 less 4 point or $4,000. You would still pay interest on the whole loan amount and owe that at maturity (end of the loan term) or when you pay it back sooner.

I hope you're not looking to take on a 16% rate! There should be hard money lenders who could do better than that. If you search enough 12% - 14% is not uncommon, even for new borrowers/investors with lower credit. 

Hey @Zach Davis non-bank lender's usually require 25% down to hedge risk as investment property financing is typically more risky than your primary residence (higher occurrences of default). 

I stopped reading when you said

"However, he uses this company to collect upfront ‘application fee’ of $1,950 with no caveat should the loan not materialize, only a condition that $500 will be credited back at closing."

Too many legit lenders (private lenders, hard money lenders, non-bank direct lenders) out there who do not charge you anything near this amount upfront and will actually refund you a significant portion of an application fee if you don't close.

@Julian Buick exactly. You're right about that. I agree, I know of private lenders whose rates/terms vary greatly. I think the confusion comes that many individuals on BP think of companies like those as private lenders, and refer to them as such, sometimes I too may intertwine them all. I think it's best to refer to such lending companies as non-bank lenders or direct lending companies. I do get what you're saying and where the use of it in such a manner could lead to further confusion. If I respond to a private lender question I'll clearly define what I'm referring to and try to keep the distinction clear.