We recently ran across a Hard Money Lender who does not require payment for the first 6 months. However, they did not lend in our area. Does anyone know of any hard money lenders offering this nationwide or in the Central Florida area?
yes…sent you an email…
Yes I sure do…hint hint. try the sig block.
Anyway, just understand that typically lenders will raise the rates if you aren’t paying for a few months. The payments you would have been making are getting added into the balance of the loan each month.
So in the end, you are paying quite a bit more. Just a little tidbit.
Also they will kill you in fees usually. I did a deal like that. Wanted no payments for 6 months. The HML charged me 8 points upfront and gave me 6 month grace period at 2.25% per month but a yrly rate of 16% on the money.
Since they were loaning upto 75%LTV, I knew I needed to get a great price on the buy since over 20% upfront was for fees…Luckly the numbers still worked and I came out ok and rehbabbed and sold it in 2 1/2months…
Just be careful with those deals…its best to have some cash in the bank to go that route with no payments due…
Yeah… that’s a lot of fees. I knew there had to be a catch. That would be too good to be true. So, let me ask you… if you sold it in two months, you paid the 8% upfront and 2.25% monthly? Was that interest only? How did the 16% equate annually if you sold it after 21/2 months? That should have meant that you sold it before you had any full monthly payments due correct?
I still had to pay the 6months of interest upfront as they work it into the loan with the closing cost. it became part of the fees at closing since I was looking for a loan with no payments for 6months, plus the numbers still had to work. I had to caluculate into the 75%LTV all the points and fees, but since i was buying at about 40% LTV I was ok,… One of the reasons I did it was this was a property I was buying had a purchase price of $600,000, needed about $125K in rehab bring the loan to $725K but was could be sold once done for over 1mil (i ended up selling it for $1.05mil and carried a 2nd for $100K in which I sold the note 3 days later for $60K) SO the numbers worked for me still…If they work, who cares what percentage you pay…
The thing about HML, is that if they do their job, they will show you adn help you sell the property or refinance quickly so you pay off the loan quickly. Most HML is Interest Only. So they make about 1.25% per month. Not alot to make on money you are lending now is it?
So, that is where the points come in. They have to get paid somehow for their money.