Saturday, April 21, 2007

Hard Money Lenders - vast and various

OK, I am sending out postcards like crazy trying to use up all of my pre-purchased stamps before prices go up in mid-May...

Anyway, I have been looking to establish a pre-qualification status at one or more Hard Money Lenders in case I come across a good deal. Most agents won't take an offer without one anyway. Here is what I found:

HML #1: A big industry player, fast turnaround with money, 2-14 days; points relatively low (3-5) and interest between 13-15%. App fee about $495. Fund up to 70% LTV. Drawback: You actually get an approved credit limit (i.e. line) and you must put up 1% of this line annually which does not go toward your deal. So if you want $300K, you must put up $3,000 up front (pre-deal) and that money is a sunk cost.

HML #2: This lender only had a $65 app fee but turnaround time for each deal was around 21 days, and they wanted 3-6 months payments up front, plus 3-5 points; also, funding up to 65% LTV. The amount of money needed upfront with this lender and the turnaround time makes it not very attractive. If I put up a little more dough and wait another week, I can get a traditional loan at much less interest. Also, the amount of paperwork they want per deal is as much as a standard loan. Here was the deal killer - they insist on putting a line on another investment property in addition to the one for your deal. I don't think so!

HML #3: This lender was the easiest to get into ($50 app fee), has a 2 week turnaround time, and has limited paperwork. They fund any and all costs up to 65% LTV (after repair value). This was the most expensive money at 7 points and 15% however. The ymention that after 1 or 2 deals they will lower the points. This was the lender I selected. Now I just have to find a deal.