Please help explaining Hard money lender terms

[Robert Rodriguez]

Hello I am very new to investing and trying to become familiar with certain terminology. I am not looking to make any moves right now but would like to have this info explained so i will know in the future.

This info was provided in a forum by a hard money lender can someone please explain this in terms I can understand. All the real estate talk and the abbreviations are new to me:

We lend on residential (NOO) and commercial property throughout DC, MD and VA
Rates from 12-16% with 3-6 Points
Closing in as little as 4 business days
We will fund 100% of purchase price and 100% of rehab costs (within 65% ARV)
Underwrite is primarily based on the asset not the borrower
We are upfront with all costs.

Tax Service Fee$150
Flood Certification $50
First deal $1,000 funding fee ( amount is reduced on future deals)
No prepayment penalty ...

Not sure what NOO is? I am assuming 12-16% is the interest rate but not sure what the 3-6 Points is talking about. I know ARV is After Resale Value but i don't understand the within 65% ARV can someone give me an example using actual numbers.... maybe that will help me. Also not sure of what the Underwrite part is about. Last is the 1,000 funding fee, is that normal? is that high? This is the DC area.

Thanks for any help provided BP

[Travis Sperr]

Robert,

NOO is non owner occupied - meaning investment properties only

Yes the percentages are the interest rate and interest only

A point or in this case 3-6% is the origination. 1 point is 1% of the loan amount, for a 100,000 loan a point is $1,000. So 3 to 6 point is $3,000 to $6,000

When a lender states the % or ARV they lend that is the amount of the deal they will lend you. If the house is worth $100,000 after repaired, the lender in this case will lend 65% or $65,000. Your goal is to have your deal, purchase, repairs and closing costs total as close to that 65% as possible to limit your capital into the deal.

Underwrite is the process used to make a decision on if the lender will find the deal. In this case the lender states that the asset or property is more important than say credit or income.

The finding fee- hard to say of it is high or not, really depends on the market. It is just a junk fee, meaning it is used to create more income for the lender.

Good luck!