Hard Money Lender Fees

[Tony Benacquista]

Hello Bp Community
Hopefully everyone is having a great $$$ day! Quick question, is it normal for a hard money lender to ask for a 2000.00 initiating fee to get the process started? What are your experiences? They said it would be applied to loan cost afterwards. Thank you in advance!!!
Tony GO SPARTY FINAL FOUR!!

[Matt Rodak]

Hi @Tony Benacquista

We ask for a deposit from our borrowers prior to moving forward. There is a decent amount of work a HML will need to do to underwrite the loan and we like to make sure we are working with someone who is serious about taking out a loan from us. The deposit helps ensure this.

That said, the deposit is held in escrow and per our term sheet outlines what the deposit will be used for. (i.e. Appraisal, legal fees, etc.) Any amount we don't spend is credited at closing. Further, if the process stops for whatever reason, we refund any amount not spent. As Matthew mentions, you should get all of this is writing. You should get a Term Sheet from the lender that outlines all fees, points, rates, etc. before sending any money to them.

Hope this helps!

Matt