Am i paying too much on interest for my loan

[Ronny Tiburcio]

Hey guys, I am currently exploring my different options, in terms of financing my first deal. The first private lender asked for a 8% interest rate and agreed to pay 80% of the purchase and price and 100% on the rehab cost. Would this be considered a good deal?

[Russell Brazil]

Yes that would be a fantastic deal

[Jeff Zinsmeister]

Are you looking to fix and flip or buy and hold? If it's a buy and hold, I would do 203K or homestyle financing.

[Greg Downey]

@Ronny Tiburcio. For a HM lender, I would agree with @Russell Brazil; that is pretty darn good.  Is there a reason that you have not looked at conventional financing?

[Isaac Blocher]

WOW! A very good deal. Take it!!

[Ronny Tiburcio]

I have looked at conventional financing and it seems like I am eligible for it. I recently applied to get pre approved but the loan officer said I should be ok. Reason why I was looking a another kind of lender is because I still need help to finance a rehab. I'm interested in a fix and flip btw. I've also read that some banks finance the rehab with a fha 203k. Is that something banks really do?

[Greg Downey]

within the FHA loan, a bank will definantly finance the rehab up to a certain dollar amount ($30k rings a bell). The 203 is challenging as the work has to be done by a contractor and it all has to be approved before closing. Before all of this, the FHA is only for owner occupied.

Long story short, your HML is giving you a great deal for a HML. Conventional will probably be able to get you 100% of the rehab and 80% LTV on the purchase.

[Kevin Romines]

Hard money that will do 80% LTV on the purchase and 100% of the rehab is really not that uncommon. I have several lenders that will do that? They base the LTV on a few factors, but the primary factor is the number of exits you have had in the last 24 months. Depending on the volume of exits (closed sales or refinances) in the last 24 months, dictates your tier which dictates your max. LTV and interest rate. The highest tier will get you 90% LTV and 100% of the rehab with rates starting in the 7's.

These are strictly business use loans, so only non-owner occupied. If you are considering an owner occupied, then you should consider the FHA 203K streamlined (35K or less) or full (up to 50% of the purchase value as a max. rehab), you can also consider the Fannie Mae homestyle renovation loan.

[Chris Grenier]

That is an absolute steal. I hope you jumped on that! 

[Ronny Tiburcio]

I want to rehab and flip to sell so I guess fha 203 wouldn't be for me. Thanks for the input guys.

[Chris Grenier]

That private lender you first mentioned is the 100% no brainer route to go! 

[John Cushing]

Are you looking to flip in NY?

[Account Closed]

Ronny it all depends on the property, I need more information before I can give you sound advice 

[Mike Wiesenhart]

Hey Ronny, I’m also in the NYC area. Do you mind if I ask who your lender is? PM if that’s better. Thanks!

[Ronny Tiburcio]

I am leaning towards New Jersey because I live in uptown Manhattan next to the GW bridge and i am currently being mentored by someone who flips in jersey as well. @John Cushing 

[Doug Emerson]

Check out 'Construction Loans' from your local community banks.

My community bank is offering "construction loans"... which requires that I present to them the accepted offer and estimates from contractors to do the rehab. They initiate an appraisal in lieu of the estimates being complete and will loan me 80% of that amount, basically ARV.

So...  If I purchase for $30k and needs $30k of work and appraises for $100k as if that work was completed, I'll get $80k on day one to purchase and rehab the house.  I do believe the construction loan would need to be refinanced into something more traditional if I still have the property over 1 year.

[David Weintraub]

Talk to @Joseph Scorese at First Bank as he understands the construction loan aspect. If you don't need to use HML, you probably shouldn't.

But yes, 8% is a VERY good deal.  

What are the points? Loan time minimum? For HML we deal with 9/2 and even see 10/1, but not really 8, unless it's like 8% and 4 points maybe?

[Jennifer Petrillo]

That is a fantastic deal. I just paid 14.5% for 67% LTV, 12 month term, but no payments required until loan paid off, which I did in less than five months.

[Frank Y.]

8% without points？ Best deal!

[Account Closed]

That's on the verge of being too good a deal to be true!