Should we be paying points before closing

[Keith W.]

I’m coming to the place I can trust for answers. 

I was either approached or maybe I reached out to a private money lender for their terms which are 90% acquisition, 6% interest and 2 points. As a first time investor, these favorable terms raised a red flag. 

The next thing that concerned me was they   didn’t need to do a pre approval. Just let them  know when I found the deal and then fill out the application. 

After finding the deal, I filled out the application. They never asked about the property, an inspection, how much for rehab, for acquisition, etc. I just put the total figure needed in the amount requested. 

They approved the application, then sent over the contract. Everything looked as I would expect it to except the last red flag that made me fully apply my brakes! 

They wanted me to send $5200 in points and fees in order to process loan. I would receive the loan proceeds wired to my bank account (another red flag) within 48 hours.

I called and asked why can’t I pay the points at closing. His response was this is the closing. Once I send the money for the points, they will wire the money. I asked who is the closing attorney or where is the escrow. 

He indicated that I may not be used to dealing with that type of loan situation and assured me everything is on the up and up. 

I felt I better reach out to my BP people to get some insight on this situation. 

Has anyone been in a scenario where they sent points of other fees as a deposit to get the loan processed? 

Is anyone aware of any scams that may be out there trying to get newbies little bit of change? 

[Wayne Brooks]

This is an absolute scam.....

No credit check or finances submitted for you

No appraisal or property inspection

No lender’s title insurance

**Points up front Before loan funds**** (points are always simply deducted from the loan proceeds, not actually paid prior to funding)

Need I say more?