Cost Of Borrowing Money

[Lorenzo Spurrier]

Hi,

I have been speaking with a quite a few HML's to get an idea of how much it costs to borrow money. I am working on getting my first fix and flip out of the way (the toughest one, apparently). With that being said, I have a few questions that will hopefully verify whether or not these are typical terms. Everybody is different slightly, so I'm going to just pick one company in particular and use their terms as an example.

Example:

They will loan 100% of the purchase price, and 80% of the rehab, and it takes 2 weeks to close. There is a $200 application fee, and a $600 appraisal fee, ($299 due upfront, the rest paid at closing)

Closing fees: 1% of the loan amount, $500 to their lawyer, $400 for underwriting, 2-3 points origination fee

I pay on the monthly interest during the term of the loan, and there is no penalty for paying it off early. They are typically 12 month loans, with options to extend up to 6 more months for a cost of 2 points of the total loan amount.

ARE THESE TERMS NORMAL?

It seems a little bit expensive to borrow money from this particular company.  I understand, they want my skin in the game. I'm not cheap, and I'm willing to spend my own money to get this accomplished if that's what it takes. 

However, I'm NOT experienced in borrowing money and I know there are people on this forum who are.  So I'm asking those select people, in their past experience, if these terms are reasonable for somebody who is looking to do their first fix and flip.  ALL feedback and comments are greatly appreciated.  Thank you

[Kenneth Garrett]

@Lorenzo Spurrier

HML is expensive money. It varies on points, interest rates and fees. It's not crazy high. I use private money @ 12% at times no points or two. 100% purchase and rehab. All interest and points paid at sale if flip or refi for buy n hold.

Good Luck.