Hard Money Lenders And Closing Cost
I'm closing on my first rehab property on the 24th of May. I called my hard money lender to ask about closing cost and was told that they could not estimate closing cost because they don't charge the same fees as a traditional lender. Then I was told to contact the title company and was told to call my lender.
Can anyone give me a rough estimate on closing costs that I may incur with the hard money lender?
Yaisa
Yaisa,
Watch Out! They will "give" you a lower rate or lower discount points only to go absolutely nuts on all the closing costs. Seems like they are just making them up as they go along.
That being said, they are providing a service. Just make sure the deal makes sense after all of the fees are added in.You should definitely see a HUD-1 before closing.
JohnCl
[ Edited by JohnCl on Date 05/19/2004 ]
Regardless if they are hard money or conventional, within 72 hrs of filling out the 1003 they need to give you a good faith estimate listing all closing costs.
If they dont and will not watch out and look elsewhere.
Just to give you some ideas, the points on a hard money loan are usually from 2-5pts. A point is equal to 1% of the loan amount. The rest of the fees are title, escrow, broker fees, etc. and they range can add up to another 2% of the loan amount.
Hard money is no joke, but one thing is that they will typically loan up to 65% or 75% of future value.
"they could not estimate closing cost because they don't charge the same fees as a traditional lender"???
Does that mean they don't know what they charge? Didn't they approve your deal? If they can't estimate the closing costs, who can?
This is a nonsense statement if I ever heard one.
Ask the lender for all costs they charge associated with yor loan., including Loan Fees, prepaid interest, Preparation fees, etc. They have to give you a "Good Faith Estimate" in all states I know of.
Then ask the Escrow/title ins co for all the costs associated with your transaction. (Including Title insurance, Escrow fee, Tax prorations, Fire Insurance, Inspection fees and any other costs paid by Buyers in your area. If you use an Attorney, add in his fee.
Obviously, you will need to put up the Downpayment, too!
Then add them together.