Does the following sound good for rehab projects - this is from a small, local bank in my community. #3 says I can’t use proceeds for closing costs, but what if my purchase price is 70% ARV, don’t I then have 15% “extra” ?
It takes me a while to understand some of this financing stuff. . .
what i’m really trying to do is get closing costs paid for!! I can try to get the sellers to pay, but for some that are trying to get debt relief, they don’t want to pay for my closing!
Thanks for any advice!
(2) For a rehab project:
A. The loan amount will be determined by a maximum 85% of
the “as if completed” appraised value of the proposed collateral property.
B. The loan funds will be allocated as 85% of the
acquisition cost or “as is” appraised value of the proposed collateral
property, whichever is less, plus 100% of rehabilitation costs, as approved by the Bank.
C. The loan amount will not exceed 85% of the “as if
completed” value of the proposed collateral property.
Loan proceeds will not include closing costs or interest expense
coverage. You will be required to provide evidence of available funds
sufficient in amount to cover these costs and expenses.
Loan terms will include interest only on funds advanced with the
interest rate to be fixed for the term of the loan, which will not exceed 12 months.