Confused And Need Answers
I've been looking for a hard money lender to work with for months. My FICO Scores are good but I'm low on cash. I just spoke to a mortgage brotker who told me that all hard money lender require that you have a large amount of cash in the bank because I have to fund the initial repairs. Is this true?
Each hard money lender is a little different. They can make their own rules.
Mine requires $500 application, 1% point, and charges 16% interest. But he funds the full purchase price, does not require a survey or an appraisal. He only works with people that he trust (and have great credit) and does not get involved in the property. The only thing he does is a drive by. My guy will fund repairs if I want at 16% in draws.
I beleive most hard money lenders get more involved in the purchase. They want an appriasal, survey and will only lend a percentage of the appraised value. I believe 70% LTV (loan to value) is common. Most will also fund repairs and they give the money in draws.
So you just have to buy right to make it
work!
Start calling some people who actually lend hard money and hear what they have to say. Ask about points, application fee, LTV amount, repairs, have them explain the draws, prepayment penalties, length of loan, etc. Then run several mini examples that fit your scenario and make them put numbers to it.,
Brenda
Hard money lenders vary widely but most require cash reserves to make sure you can follow through with incidentals. They don't require you to use it as they will lend 70% LTV or whatever, they just want to see a buffer there just in case. Most charge 12-18% interest and 4-6pts.