Letter of Intent with Loan Fee - Is this Legit

[Torianne Baley]

Is it normal to pay anything upfront besides a down payment on Private Money Lender financing deal

Does this look legitimate to you guys https://drive.google.com/file/d/1WXAqllCuZVMjkv6HjqLmv-gw3bmwPqr2/view?usp=drivesdk...

Has an upfront loan fee of $3555

Any help with this would be greatly appreciated

(I work as an assistant for my boss)

[Jeff S.]

I took a quick look, @Torianne Baley:

1) With short-term treasuries now paying around 4.5%, guaranteed by the USG, why would anyone loan to you at 5%? HML rates are currently around 11% plus a few points. You can stop right there. On its face, this is a scam. Stop reading if you want.

2) I couldn’t guess what “There is a 6 months of grace period before interest payment begins” means.

3) They call their $3555 charge a “Loan Fee,” stated a few lines up as 2%. 2% of $235,000 (loan amount) is $4470.

4) Do you seriously believe the loan fee, “… IS 100% REFUNDABLE IF THERE IS ANY DEFAULT FROM THEPART OF THE LENDER OR IF THE BORROWER CHOOSES TO TERMINATE THE LOAN.”

5) It’s okay to pay an appraiser directly. Beyond that, sending upfront fees to a lender is not okay. Lenders get paid at closing.

Consider developing a better process to find and vet your lenders, Torianne. No one here will, or should, do your work.