Advice on These HMLs

[Derek T.]

Okay so I am building my team and I am looking for a HML to go with in the state of MD. I am looking to buy/rehab/hold properties. I am trying to buy at 55%-65% of ARV, rehab properites that require less than $40,000 worth of work, and refinance into a convetional loan after 4-6 months. So I have come across these companies who quickly got back to me with their requirements.

My perference is to go with a lender who will require the least amount of my own money in the deal (even if that means higher points/rates) although I have the cash reserves (I would like to keep the reserves for qualifiing and emergency purposes). In case this helps I have a 762 credit score, below 25% DTI, make $70,000 a year, cash reserves of $50,000 and have already prequalified for refinancing with a portfolio lender. Can you let me know what you think of these HMLs who lend in MD? I would prefer a 75% ARV with the least amount of cast out that I could. I know this would be hard to find in this day.

Also would it be better to try to find a portfolio lender who will do a rehab loan and refinance it after the rehab is done? Do they require more skin in the game than HMLs? Thanks.

Company A

-What % of LTV do you all offer and does this include the loan amount, closing costs and rehab costs?

OUR MAXIMUM LOAN IS 65% OF AFTER-RENOVATION VALUE. LOAN PROCEEDS COVER PURCHASE PRICE, POINTS, AND REHAB COSTS WHICH ARE HELD BACK AND PAID IN DRAWS AS WORK IS COMPLETED. LOAN PROCEEDS CAN ALSO BE APPLIED TO CLOSING COSTS. WE DO REQUIRE THAT THE INVESTOR HAS CASH IN THE DEAL OF AT LEAST 5% OF THE LOAN AMOUNT.

-What are the typical closing cost fees, points and interest rates?

WE CHARGE 5 POINTS, AND INTEREST APR IS 12% FIRST 3 MONTHS, AND 14% NEXT THREE MONTHS. WE REQUIRE INVESTOR TO PAY OUR APPRAISER AND REHAB ESTIMATOR FEES (TOTAL $750) TO CONFIRM THE ARV AND REHAB BUDGET NUMBERS. CLOSNG COSTS USUALLY RUN ABOUT 2% OF LOAN AMOUNT FOR TITLE POLICY, HAZARD POLICY, TRANSFER TAXES, ETC. NONE OF THOSE CHARGES GO TO US AND WE DO NOT CONTROL THEM.

Company B

-What % of LTV do you all offer? Can I roll points, etc. into the loan?

We go up to 50% LTV based on ARV (after repair value) and hold repair monies in escrow. Or, we can do a simple, straight loan based on 50% of "as is" value.

Yes, we can roll points and fees into the loan (on a case-by-case basis). While our preference is that the borrower have money in the deal, if you are buying at a significantly reduced purchase price, we will allow the loan to absorb some fees/costs.

-How does your escrow account work for rehab projects?

Company C

-We do not ever lend more than 65% of the ARV. If you need more than that, you would have to bring that to the table.

-We do not roll closing costs into the loan. They have to be brought to the closing.

- We charge 3 points for the 6 month loan program, but we require 5% of the total for purchase and repairs down. We withhold 3 percent of your loan amount from the repair escrow that will be deducted from your payoff if you repay within the 6 months. If you do not pay off within the 6 months, we keep that 3% as an extension fee for another 6 months. We also have a 12 month loan program that is 5 points paid at closing and we do not require you put any money down with that loan program. We also do not withhold any of your repairs escrow with the 12 month loan program. We also have a $150 processing fee, a $250 underwriting fee, and a $550 or $750 doc prep fee (just depends on the size of the loan) that are also paid at closing. Our interest rate is 15.9% for the year (no prepay or exit penalties). If you are very strong financially, we may be able to lower the interest rate to 14.9% and after a few deals, we may be able to work with you on the points a little as well.

- No. There are never any prepay penalties.

We hold back repair money in escrow and reimburse you as the work is done (in arrears). For example, once you make the repairs, you call us, we go to inspect, and reimburse you for the work done.

-What are the typical closing cost fees, points and interest rates?

We typically charge 5%, 14% simple interest.