What You Should Know About Hard Money Loans
by: Weston A. Jones
February 12, 2003
So you found a good deal with a great LTV and can't
go to an institutional lender because of bad credit,
or need funding in two weeks or sooner. So, you have
to go "Hard Money." It's actually going
to get your deal closed and put money in your pocket,
but since you’ve never have gotten a hard money loan
before; what can you expect?
At Mentor Financial Group ("MFG"), we have
funded deals we know and will tell you what it is
you can expect when taking out such a loan. Each deal
is unique, so nothing is set in stone, but here are
some of the expectations you should have when getting
Hard Money loans:
1. Title insurance is a must.
2. All delinquent taxes, loan payments, etc. will
be taken out of the proceeds.
3. Insurance, typically, will add the lender as
a co-insurer.
4. Fund control is always set up on construction,
development and any loans which have budgets.
5. Borrower will pay all closing costs, fees,
etc. out of proceeds.
6. Many lenders require the property be put into
a single asset LLC, which the loan is made to.
7. Assignment of rents is typically set up, even
if there are no rents.
8. Interest is, in most cases, at least partly
in a reserve or prepaid.
The process includes due diligence, ordering of
the preliminary report, opening escrow, drawing of
and signing of documents, recording of documents and
distribution of funds. Expectations adjust based on
each type of deal so borrowers may need to be flexible.
So next time you need a loan keep in mind these reasons
to look at Hard Money and call Mentor Financial Group
at 866-Mentor5 (866-636-8675) ask for Weston Jones.
Email me at weston@mentorfg.com or fax me at 866-291-1065.
At Mentor Financial Group (“MFG”), our business is
to fund investments secured by trust deeds on commercial
real estate, including income producing properties
(i.e. apartments, office buildings, etc.), land and
development projects (i.e. construction loans, rehabs,
condo conversions, etc.) and non-owner occupied residential
properties.
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