Hello to all again, I have a question about Interest-only hard money loans and the down payment. Can the down payment be minimized if the hard money loan is an interest-only loan? Is it prudent to select a hard money loan that is interest-only?
Thanks to all for the feedback.
what are you looking to do, why do you need hard money? the loan being interest only or not has really nothing to do with the down payment amount. most hard money loans are interest only anyhow and go to about 70%ltv.
Hello, Zachj, thanks for the response. I am planning to perform rehab projects. My concerns are with the downpayment to secure the hard money loan. From my research, it appears that if the investor is not able to obtain the property at a significant discount, and the rehab (escrow money) exceeds a certain percentage of the A.R.V., the money that the investor will have to bring to closing can equal or be more (10-20%) than the downpayment required on a traditional or conventional loan. I am interested in the hard money process but I am greatly concerned about the amount of money required for the downpayment to secure the note.
well lenders will go to about 70%arv in most cases and some will go as high as 80% on investor properties but the qualification requirements are tighter. If you need more than 70-80%arv to complete the project than it can’t be that great of a deal usually.
Zach, thanks for the feedback. I will just have to find a deal that meets all the parameters in order for the down payment to not be a big deal.