NEWBIE Questions!!

I have a Credit score of 750+ and a 45% debt to income ratio. I heard here that Hard Money / Private lenders don’t use your Credit Score. How do I seek these lenders out with my deal proposal? Also, is it better to stick with local investors?


Look in your local yellow pages. You may not see the words “Hard money lender” but look for mortgage brokers that advertise things like “rehab loans” “No- Doc”, “investor loans” etc… Those are clues that they deal with HML’s. Keep calling around until you find a few that you can deal with. They’ll tell you their requirements. You can also look to the left hand side of this site and look for HML’s that are Nationwide or operate in your state. Hope that helps. :beer

With a 750+ and a 45% DTI why are you looking for a HML, you can go to your local bank and do much better than HM.

This depends on the lender. I lend hard money in my area and I don’t care about credit score. I only look at the property and CLTV. On the other hand, another hard money lender in the Carolinas does look at credit score.

YES! Carolina HML have a credit score requirement of 660…it’s low, but they do have the requirement. Anyways…he told me that my deal wasn’t good and I didn’t have a good enough spread. He couldn’t / wouldn’t explain indepth, so I bring it here:

I can get the property for 80K and the comps support 120k resale. This property was purchased less than 6 months ago (OCT 07) for 122K. Yes, the owners bailed. I estimated NO MORE THAN 10K. The terms were 73% of the ARV + Repairs and 6 points and 15% for 6 months. Kinda steep, but it’s HM…Can someone put this numerically so that I can understand how HM works?

73% of 120k = 87.6K Did he say not good because I’m short the 3K? I offered to use some of my money for the repairs and he said NO, they must guarantee the repair work for their own security.



Is this your first rehab? They may be looking for a 65% ARV. They may also be thinking you’ll need more time to sell in today’s market. How much money are you putting down? The closing costs are usually wrapped up in the loan. Either way, they should tell you exactly why this is a bad deal. You need to know their requirements before you send them deals. Otherwise its just a waste of everyone’s time. Have them tell you what they want. :beer


First, you need to try to find a better lender. I would never pay 6 points and 15% unless I was absolutely sure I could rehab and sell the house VERY quickly. I use a PML and don’t pay anywhere near 6 points 15%. As to your original post, finding someone locally is key. If you know any mortgage brokers, RE agents, buisness owners, ask them if they know a PML.

Second, they’re going to want to lend to someone whose experienced. They want to be sure you can handle a rehab no matter what the size.

Your deal seems OK. Factoring rehab cost, closing cost, holding cost, sales cost, probably is the reason the HML denied it w/ those terms. I would buy at a steeper discount.

Hope this helps

I’ve successfully completed 2 rehabbs but i used conventional loans and they both sold in approx the same area under 45 days. But what I’m looking to learn is the “numbers”, here’s what I came up with. Someone please correct me where needed ('Cause i could be WAYYY off!) I’ve never used an HML sooo:

73% of 120k ARV = 87.6K w/ repairs included.

6 points (6%) = $5,256
15% of 87.6K = $13,140

Total Payback is $105,996 to HML

If property sold for $120K @ 6% (realtors) = $7200

Total Net from Investment = $6804 pending not having to pay closing costs to get the property sold.


If that’s the case then he wasn’t at all being an inconsiderate jerk! He was actually looking out for MY well being and not the fact that he’ll get his money. Mann, I gotta eat crap and recall him with an apology.

I’m guessing Conventional is the only way to go, I just HATE faxing and refaxing DOCUMENTS to prove I can pay for a loan. PLUS the constant wearage on my credit score! Just thought HM would be easier, with a little cut into my profits but that’s over 50%!


It seems you’re missing some closing costs @ purchase (Taxes,Fees,Stamps,etc.). Also, while its good you figured a years of interest, don’t forget about utilities,insurance payments,etc. in your holding costs.

You’re right, conv. mortgage full docs are a pain in the arse. They want to do a full cavity search for a lousy commitment letter.