You don’t need it. - Posted by Carmen_FL
Posted by Carmen_FL on December 08, 2000 at 16:45:29:
As Mark said, a hard money lender will lend you 65% of what the property will be worth once it’s fixed up. So let’s say you have a house that’s going to be worth $100K. You get it under contract for $62K. You go to the hard-money guy. Since $62K is below 65% of $100K, the hard-money guy will lend you the entire amount - 100% of the purchase price. Since you still have a $3K leeway, they may even either (a) let you roll up to $3K of the closing costs into the loan; (b) hold that money in escrow for repairs; or © (less likely, although it’s happened) let you keep it. As a buyer, I’ve walked away from closings with $$ in my pocket more than once.
Some Hard Money guys want to see you put some of your own sweat and tears into the equation, and will make you come up with you own closing costs, or at least $1,000. Others won’t. The more you work with them, the more flexible they become. My hard money guys will roll all my costs into the loan - closing costs, points, and, if there’s room, even a couple of months of payments.