HARD MONEY LOANS
- First Funding loans up to 70% of current appraised value. The loan can include purchase price and improvements.
- Loans terms vary from 6 months to 18 months with interest payable monthly.
- Financing of improvements will cover pay out installments without additional fees. If some improvements are not covered by the loan, then Borrower’s portion must be done first before loan funds are used.
- Borrower must have out of pocket cash in the range of 5% to 10% in the transaction depending on experience and favorable history with lender.
- Interest rate from 12% to 17% depending on perceived risk, experience, and history with lender.
- All Borrowers must submit loan application and allow lender to receive credit report
- Due to the state and federal regulations on owner occupied loans, lender shall make business only loans and not owner-occupied loans.
- “Hard Money” loans shall be a “gap” financing or “interim” financing to enable the Borrower to obtain permanent financing for “rentals” or resale.
- Be aware that loan regulations may differ by state and may cause acceptance, terms, financing to be different than was is offered by another State.
ONLY BUSINESS LOANS
- Due to the difficulty in complying with state and federal regulations, First Funding will only make loans to companies, limited liability companies, corporations, limited partnerships or individuals who can show ownership in a home that would be considered a “homestead”.
- Because of the high risk involved in these type of loans, the interest rate charged exceeds banking financing charges. Our funding comes from private sources that dictate the yields they seek. Business loans provide higher yields.
- Even when one member of multi-party owners will occupy the subject premises, lender shall be unable to provide such a loan.
- Where a contract with an FHA foreclosure allows “cash sales” to acquire the purchase, we will not be able to loan funds without a note and security documents being signed at closing
- All loans must be secured with an approval note payable to lender with approved mortgage. All loans must have hazard insurance coverage and mortgage title insurance coverage.
- Commitment fees will be charged at terms loan is originated between 3% to 5% of the loan. So long as the loan falls within the 70% of loan to value, the commitment fees may be financed. As half of the commitment fee covers the cost of securing the lender’s approval, the other half of the commitment fee handles the servicing of the loan on a monthly basis for the duration of the loan.
- A processing fee will be charged at closing of the loan to cover the current in-house appraisal as well as inspections of improvements.
- An attorney fee is paid at closing to cover all drafting of loan documents and approval of closing documents in anticipation of funding of the loan.
COST OF IMPROVEMENTS INCLUDED
- So long as the loan comes within the 70% of current appraisal value, the lender may fiancé repairs of improvements. If the improvements cannot exceed the 70% loan to value, the borrower must have the cash assets to pay for that portion of the improvements first. Where the improvements required city or government permits, those approvals must be obtained prior to payouts.
- All contractors making improvements must b e approved by lender’s representative in advance of loan being made.
- Contractors shall obtain lien waivers of subcontractors and furnish copies to lender
- The improvements must consist of good quality and workmanship.
- Prior to disbursement of lender funds, the work must be completed, approved and inspected by lender’s representative.
- Requests for inspections must be arranged with Lender’s representative in advance of receiving funds.
- No additional fees for inspections will be charged at this time.
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