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Frequently Asked Questions
1.
How do you define "Hard Money?" 1. How do you define "Hard Money?" "Hard Money" loans or "equity loans" as they are sometimes called refer to non-conventional real estate loans. They are usually funded by private money sources and investors and not banks, pension funds, etc. Interest rates and points on such loans are usually higher. Terms usually range from 3 to 12 months. Hard Money loans have one basic requirement. There has to be some substantial equity in the property to give the lender a reason to invest their funds in an otherwise risky venture. So, why would you utilize a hard money lender? The property to be purchased might be presently vacant and in need of repairs. It may be an older property in a failing neighborhood which has the potential for revitalization. It may be a foreclosure and can be purchased on a short sale. Or you may just need a quick closing to secure a property before you find an investor/rehabber to which you want to flip the property. Or you may want to purchase a run down piece of property, rehab the property, and refinance it for rental income. In all these cases, you would need a hard money loan because conventional financing is just not an option or it would take too long to secure. "Hard Money" is just a cost of doing business and an effective method of doing business as a real estate investor. 2. Do I need good credit to get approved for a loan? Our approval is based upon available funds and the value of the property you want financed. We look at your credit to get a feel for who is borrowing the money in order to rule out people who obviously never intend to pay anyone. But, more importantly we look at the value of the property after it is repaired, the price you are paying for the property and the cost of repairs. We look for ways to finance your investment, not for ways to turn you down. 3. How long does it take to get approved for a loan? Depending on the type of deal you have we can often fund Within 24 hours after you have submitted your loan application and documentation. 4. How long does it take to close the loan once I have been approved? After your submitted property has been approved, it normally takes a couple of business days. Sometimes more, sometimes less. Many times it all depends on how long it takes to have a title search completed and get closing scheduled. 5. Should I have an investment property under contract before I fill out the loan application form? Broker Capital can pre-approve you with a pre-approval letter prior to your finding the right investment property. 6. What is the term of the loan? We typically do 2-3 month loans and can extend these loans for up to 12 months depending on your needs. But, the object of a hard money loan is to either turn the property quickly or have it rehabbed and refinanced with a conventional lender. Since Broker Capital does not have any prepayment penalties, you may prepay the loan anytime you wish prior to the term of the loan. 7. Do I have to fill out the loan application form each time I submit a new investment property for financing? Yes. Because the lending decision is based on the characteristics of the property each transaction must be submitted. 8. Do you pull my credit report each time I request a loan? We will obtain your credit report when you submit your original loan application to us. After that, we will periodically review your credit as our business partnership continues. 9. How do I get refinanced to pay off the loan to Broker Capital? If you are purchasing a property to rehab and rent, we can refer you to a Broker Capital Partner who specializes in permanent loans and deals with investors who own investment rental property. 10. How can I find a property you will approve? As long as the property meets our lending criteria it doesn’t matter where or how you find them. 11. What "Loan to Value" (LTV) are you looking for? Broker Capital loans no more than 75% LTV. Please refer to the descriptions of our loan programs for details. 12. Can I get repair money to rehab my investment? You most certainly can. We fund all your repairs up to what the LTV will allow. We do require you to complete a detailed, itemized repair list of the repair work. An escrow draw schedule identifies the order in which the repairs should be made. After a certain percentage of the repairs have been completed and verified, the monies are withdrawn from your escrow account and forwarded to you. 13. How many investment properties can I finance at one time? Our policy is to start with one property until we have an established business relationship with you. As you become more experienced and have successfully completed a few loans with us, we can look at funding multiple properties as they are identified. 14. Do I need to get an appraisal? If you have a current appraisal Broker Capital take that and have a professional review it. We will order another appraisal from a qualified appraiser who is familiar with evaluating investment properties if the initial review of your appraisal comes back negative. The appraiser will determine the "after repaired value" (ARV). You will be required to prepay for a property inspection and appraisal. 15. How does the escrow draw procedure work? Each draw request will require an inspection to ensure that the work is completed in a thorough and professional manner. After completing a certain percentage of the required work, you will fill out a "Draw Request Form" and forward this to Broker Capital. We will schedule an inspector to visit your property and authorize the release of your escrow funds. 16. How much of my own money do I need to put in the deal? Points may be rolled into the loan subject to meeting our standard loan to value and credit criteria. You will need to make sure you have money in reserve to pay the monthly payments during the term of the loan. 17. Do you require a survey? Sometimes. If needed, the closing attorney or title company will provide that to Broker Capital and to you. 18. Do you make loans on rental property? Yes, we do loans on rental property. Same parameters as single family homes. 19. Will Broker Capital do an extension on my loan? If your payments are current and repairs are complete, we will consider extensions to your loan. The interest rate will be increased and additional points will be charged and collected at payoff. Please see the explanation of our loan programs for additional details. 20. How much is the typical loan going to cost? All loan transactions are different. The first loan we provide for you may be different than the third or fourth loan. How different will depend on the particular deal and the business relationship we have developed with you. 21. How are the closing costs determined? Closing costs have always been a mystery to borrowers unless you close numerous loans. We want you to understand where your money is going and what costs are involved before going to your closing. Traditionally, you might never see a HUD-1 Settlement Statement until you get to closing. For that reason, we will provide you upon request a list of typical charges for the services provided by the closing attorney or title company. If you have any questions after reviewing the charges, feel free to contact one of our representatives. 22. How are the closing costs determined? Monthly interest payment are figured as straight line interest only at the note rate. For example, you have a $100,000 loan with a 12% note rate, your monthly payment will be one months interest, 1%, times the principle amount of $100,000 which is $1,000.
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