Need financing - Posted by Ron

Posted by Paul Macdonald on November 09, 1998 at 14:30:24:

I don’t know if its a better route since I’ve never done any deals with private money. But its fairly inexpensive - good credit, LTV and DTI’s for the borrower and they’d probably need in the range of 95% of hardcost or appraised value, whichever is less for an owner occuppied unit.

With a just missed Fannie construction lender you can get an investment unit at 75% to 80% LTV of appraised value - which is really a great deal - cause if you’re doing substansial renovation or new construction and do not have an instant 20% equity you are doing it wrong.

Be warned, they will check out everything. Figure 1 to 2 months for approval - of you, of your builder (and your builder better be arms length), of everyone involved. Its about twice the paperwork of a normal mortgage application so its no big deal for the benefits. Rates right now would be about 8%ish for a 30 year fixed. Points? Depending on all the BS anywhere from 1 to 4.

Places to find these loans - there a few multi-state companies but usuall

Need financing - Posted by Ron

Posted by Ron on November 08, 1998 at 18:09:11:

I need a hard money loan for a rehab. This is the first one I’m going to do. I understand I can contact Mortgage Brokers for a hard money loan.
I have several questions.

  1. How many points should I expect to pay?
  2. What interest rate should I expect to pay. What’s the going rate for this type of loan?
  3. What length of time can I get the loan for? I would prefer one year, is this type of loan available?
    The property is in New Jersey and if anyone out there has a name of a reputable broker here and has had experience getting loans form them I would appreciate you forwarding the names and telephone numbers of the brokers.
    Thank you, Ron

Need financing? Shop til you drop! - Posted by Paul Macdonald

Posted by Paul Macdonald on November 08, 1998 at 22:35:02:

Why in the world would you get a hard money loan? If your credit is good and you qualify otherwise there are plenty of local lenders that will do a construction or rehab loan. Or any average B grade lender could do the job. And I don’t know of any B/C lenders that charge nearly what a true hard money lender would.

But whatever route you take (I’m not pulling your chain, the reality is that you MUST shop your notes just like you shop your properties) the answers are so variable its almost like I’m not answering them. Also depends on: the type of lender you are talking to, your credit, true LTV before and after the purchase, etc., etc., etc.

  1. From 1 to 10 points.
  2. About 8 to 18%.
  3. Yes

Now I KNOW that helped a bunch didn’t it?

And to top it off I’m afraid I’ve got no referals for you in Jersey. Best advice I have for you, if you don’t get a direct referral from this board, when you interview your brokers find out the size of their approved lender portfolio - the more niche lenders

Re: Need financing? Shop til you drop! - Posted by Redline

Posted by Redline on November 09, 1998 at 11:28:12:

When you say “local lenders that do construction or rehab loans” … you mean regular banks? What are the criteria for these loans and how long do they take to close? Seems like if these are from “conventional” lenders you’ll be stuck jumping through hoops for 3 months. Is this a better route than private money?