The basic requirements for a Hard money mortgage loan

The basic requirements for a loan - Hard money mortgage.
In any company the requirements can be slightly different, but you still want to know.

1. Good Faith Deposit - GFD
Deposit of "seriousness" fees prior to establishing the loan. In each company, the amount of the deposit will be slightly different, but it is usually about $ 1,500. In some companies, this amount is directed to the credit check, the appraisal of the property and the underwriting (writing of the loan agreement). Many companies return the surplus left over from the same GFD after closing (Closing), subject to an email requesting a refund of the amount difference to the bank account owned by the investor. In most cases, the investor is busy at the beginning of work and forgets to send such an email and thus the lender sweeps the difference .. Although it is a sum of about $ 500, but it is always better to leave the money in your pocket.

2. Loan Application - Application form
Fill in this form where you are required to fill in data such as: experience in flips and / or renovations, whether to take a similar loan in the past, whether the loan applicant does it independently or, speaking of an LLC, presenting a purchase contract, in case of purchase under LLC the lender will ask to receive Formation Docs, that is, a certificate from the country in which the company was established. Signed Operating Agreement which clarifies who is responsible for the company and whether it is a partnership, etc., the investor's approval to check his credit status by the company, title, insurance on the property, SOW-Scope of work, ie, what type of renovation the property requires. Of course, the cost of each operation must be specified. (Keep in mind that in flip work there are UAVs and therefore, it is recommended to add about 20% earning confidence) since usually, Lander will not be willing to accept changes after starting work, which may put you in automatic default, even though you meet the monthly interest payments. And of course, the exit plan must be added (i.e., will the investor work to get a refund, or will he sell the property)

3. Foreclosures and Bankruptcy
In examining the lender's credit, he will check whether the investor has gone through bankruptcies and / or forfeited assets in the past.

4. experience
The final cost of the loan is often determined on the basis of experience in the field and credit score.

5. Is the data the same?
Please note that the COMMITMENT form did not change data from the Term sheet form. Often the lending company makes an attempt to "improve allocations" prior to closing and may "accidentally" change the amount of interest and / or points, panel prefixes, etc. (therefore it is always recommended to take an attorney to review the material).

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