I have a guy who has a free and clear 2 family upstate NY that needs a loan and cant get one due to the current credit crisis…I will be charging him %15 interest and %65 LTV…How many points is common to charge on this loan?..The loan amount will be for $40k…He is also putting the deed in escrow at my attorneys office and signing numerous peaceful possession contracts and surrender of rights agreements…And if you can think of any other things I may be missing…I own in the area so Im familiar with the value of the property and hoping for a default…
BLL,
Thank you for the response…Any suggestions on the length of the loan?..The longest I wanted to go out was 10 years with buyout clauses so he can refi and possibly buy me out earlier…but I’m open to any suggestions…
I typically do HMLs for 4-12 months with no prepayment penalties. The shorter the duration the higher the points as I make my money on the points and treat the interest as a bonus. It’s very expensive money for a long term borrowing solution, but I would be very happy to earn 15% with low LTV real estate backing the loan. I just don’t expect borrowers to be able to maintain that level of debt service for very long. My borrowers are using the funds for rehab and then refi with conventional financing after the repairs are completed.