Compulsory Principles for Hard Money Lending

5 Points You Must Know Before Taking Hard Money Loans:

1. First, it must be understood whether this is Hard Man Broker or Direct Lander. If it is a broker, it is important to check which incoming (GFD) Good Faith Deposit account. “Good Faith diffuse. As a directlander, I often come across the fact that the broker has taken the GFD into his account and so the broker locks the client, then afterwards it is almost dysfunctional as he has already received his fees and the investor is left alone to deal with the directlander.

2. If you find out that the loan representative working with you is a broker and that, after initially introducing himself as a direct debtor, you may want to stay away from business relationships with such a person, because if you cheat on something that is easy and easy to check, it is difficult to know what the next person's fraud or inaccuracy will be.

3. Often there is a broken phone between the broker and the directlender and therefore, even in matters where you work with the broker, you should also talk to the directlender a few days before closing to avoid last-minute blatant. For example, I asked a broker to update the investor that a survey should be done on the property, but the broker who took 10K as a GFD forgot to update the client, and only after I mentioned the broker again was it helpful to update the investor. It may be noted that, the broker updated the client on Friday at noon and the closing date was set for the Tuesday following. In light of the broker's conduct, the closing date on several days was postponed, forcing the investor to compensate the seller. In the compromise between the broker and the investor, the parties came to understand that, the broker must pay the investor $ 6,000 at closing.

4. It is important to know in advance what the costs of the loan are, the closing and whether there is a Prepaid Penalty Penalty Prepayment. It is not always the company where interest rates are lower, closing costs will be lower. Closing costs usually range from 3k to 10k. In addition, one must check how the interest rates are understood, and how Construction draws are performed. In every Hard Manic company it may be different. In this context, it should be noted that most companies charge up-to-date interest rates. That is, the interest only applies to the money that was actually drawn (for example: if I took a loan of 100K when 70k was purchased and the renovation permit I would receive as the project progressed. Since when does the investor pay interest on the balance of 30k, is it from the closing date or is it from the actual receipt date ?!) . By the way, I would note that on the West Coast, the interest rate model is all about the amount as of the closing date. However, the interest rate there is lower than 10 + 2, although this is not necessarily the cheapest company.
For the peripheral interest, be aware of whether the hard man will lock you into the deal even if it is for a minimum period (the interest rate is one percent a month so that six months will cost you about $ 6,000).

5. Selling notes
Although not much talked about, but definitely worth a reference. Quite a few vows sell the promissory note to a third company upon closing. An investor often happens to be "stuck" due to BTHM, which results in a delay in construction plans and a flow problem. If the same investor chose a blender that sold the promissory note, it would be very difficult to reach understandings with the collection company, which would put the mortgage into dipole mode, and from there the path to losing the property could be short.

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