Downpayment Lender Recommendations

[Ryan Anthony]

Currently a new real estate investor looking to source my financing. I'm for advice and recommendations for my current lending situation. I'm looking to buy a STR in MD, and i've run into a bump in a road for my financing. I received a gift for the downpayment and closing costs however my lender has stated that gifts are not acceptable forms for the downpayment etc. He suggested that I wait (2) months for the money to season in my account prior to moving forward. Has anyone else encountered this problem and what was the workaround they utilized?

Thanks in advance

[Matthew Crivelli]

You could use hard money to finance the purchase. There are less rules on the cash you have. You lender has seasoning requirements which is typical of banks. The closing costs may be higher but you should be able to get higher leverage and quick close times. 

[Ryan Anthony]

Thats what I was leaning towards. To my understanding closing costs for typical banks is anywhere from 2-5%. By chance, what are the typical closing cost percentages for hard money lenders?

[Matthew Crivelli]

@Ryan Anthony It would be similar! I would say 3%-5%. Same ballpark

[Chris Mason]

Originally posted by @Ryan Anthony:

Thats what I was leaning towards. To my understanding closing costs for typical banks is anywhere from 2-5%. By chance, what are the typical closing cost percentages for hard money lenders?

 You're conflating all closing costs with lender-related closing costs. For owner occupied real estate, consumers are on average paying out 0.7% of the loan amount to the lender at the closing table (a 40% surcharge over the 2019 baseline of 0.5%), non-owner occ is probably closer to 1%. Then there's other closing costs that have nothing to do with the lender.

HML lender specific closing costs do indeed commonly appear in the range of 2% or 3%, ballpark, starting. And then you've still got the non-lender-related closing costs, to boot.

Unless it's the deal of the decade that you absolutely can't miss, seasoning your funds 2 months is probably the winning move. 

[Ryan Anthony]

Thanks Chris, makes sense. Appreciate the response!

[Nick Belsky]

@Ryan Anthony

Your loan officer needs to get more creative.

Have the gift funds wired directly to your title company from whomever is gifting them.  Get a gift letter together and have the giver e-sign it.

No sourcing required.  Works every time.

Cheers!