Re: Are these good terms??? - Posted by Bill K. (AZ)
Posted by Bill K. (AZ) on June 15, 1999 at 23:49:14:
I have been reading that hard money lenders are usually only willing to go 65, maybe 70, percent loan-to-appraised value. So, if you purchase low enough, you might be able to get 100% financing since it would equate to 70% of appraised asset value or less. These lenders usually look to the value of the asset for their security, and they charge anywhere from 0 to 5 points of the loan amount. In addition, interest rates vary from 12-15%. Opting for a higher interest rate may reduce the number of points you have to pay.
I’ve also heard of 90% non-owner occupied (NOO) loan-to-value (LTV) loans. I am not aware of any 100% NOO LTV loans, but that doesn’t mean that they don’t exist. I’m just not aware of any. In either case, both of these types of loans usually require qualifying by the borrower since the asset might not provide enough collateral to satisfy the lender.
Based on your information, the rates you were quoted sound great! However, you don’t mention whether the terms you were quoted are “owner occupied” or “non-owner occupied”. My mortgage brokers have quoted me rates similiar to what you are referencing; however, it is for my buyers, i.e.: owner occupied.
No matter, you should always remember that it’s NOT the cost of money that’s important…it’s the availability. If these terms are truly available to you, make sure that you invite the lender to dinner ASAP. Remember, you aren’t going to be paying 12-15% for 30 years, just a few months. So, if you’ve calculated your holding costs properly, it really doesn’t make a big dent in your profit.
I hope this helps.
Bill K. (AZ)