Need Guidance: Hard Money Lender Quote

[Bobby Gill]

Hello Everyone!

First time using Hard Money lending. I need your advice to see if the terms are fair from this local hard money lender.

The want to set me up with a $500,000 LOC

Personal guarantee

-Interest: 9.99%

-90 day interest minimum

LTC - up to 85% - Down payment required is 15% of total acquisition & rehab cost

Max loan amount is 70%. Only lend what I need.

3 points

inspection fee: $450

Processing fee: $895

Appraisal fee: $595

Rebab escrow fee:$535

-Rehab - 100% funded by lender

-3 Draws paid on completion of each phase of rehab.

Is this a fair deal?

Points, down, interest rate come down after I have done 3 deals with them.

down to:

2 points

10% down

9% interest rate

[Chris Mason]

It's fine.

I don't do hard money loans, but I talk to folks on the back end refinancing out of it. 

Something that's crystal clear to me based on client feedback, with HML, is that you're just swapping rate/fees/terms for reliability (or lack thereof). So, while I am 100% certain you can find a "better quote," it's probably just going to be at the cost of a greater % chance of the lender pulling the rug at the 11th hour.

About six months ago I helped someone refinance out of a HML at about 7.5%, and yes it was true hard money. It took us 3 months to get the payoff demand and verification of mortgage. So even though there was no "official" minimum period of them collecting interest, it sure as hell felt like it to that borrower, lo and behold we finally got it, and were able to close the refi, mysteriously right after the 12th month passed since they took it out, that must have been an "odd coincidence"... ahem.

There are honest and forthright HML out there, to be certain. And, not so honest as well.