I’m having trouble finding an HML to fund my short sale deals. I always thought HMLs lend money on (example) 70% ARV.
I have a deal where ARV is $500k, I will pick it up for $350k (70%).
I phoned what supposdely was an HML and told him about this. He told me that I had to put down 10% out of my own pocket and that no HML would lend me the money without putting any of my own money down. I told him I wanted to borrow 70% ARV with out putting any of my own money and also to include some money for repair. The guy flipped when I told him that and he said a loan like that will not happen?
Have I been living in different planet or was this guy full of it. This guy was actually the 2nd guy who had told me similar response.
Aren’t HML supposed to lend on equity. Again going back to my example: value is 500k; purchase it for 65% of value, get 70% from hml to include 5% repairs. Is this realistic??? Please someone bring me down to earth and clarify this. I live in Los Angeles.
You’re leaving out the fact that the points have to be deducted off the loan upfront.
$500k x 70% = $350K
$350k x 6pts (avg) = $21,000
$350k - $21k = $329k
$329k - $30k (taken from your reply on another post) = $309k
$309k - $320k (purchase) = short $11k
This doesnt taken in consideration that some lenders make it mandatory to build in 2-3 months of payments into the loan. If you can show assets or high income they may not require this. But not all lenders make it mandatory.
I’m still working on putting some information for the bank. You are right about the other fees. Based on your assessment, I have to purchase it at 300k for 70%; or higher if I can show higher value. I do have reserves.
What can you tell me about HMLs?
Do they always require that we come in with a downpayment? Can I find someone that will finance all 70% to include purchase price and rehab costs?
Joe,
I can tell you that clients have been successful in working with hard money lenders nationwide to obtain rehab loans based upon the ARV, requiring nothing dowon other than a few upfront fees such as the appraisal.
Each HML has different guidelines and very few loan nationwide. Mostly they just target their surrounding region.
Over the last month we’ve seen even the HML tighten up. So some of the HML that did not required down payment are now trying to minimize further defualts and risk by requiring the borrower to come up with some funds.
Not all have done this but it would be hard to say what you would qulify for without knowing more specifics. Sent you an email to address these.