We can work with borrowers to utilize a “soft pull” credit history service such as CreditKarma.com.
We may as it is important to us to know if borrowers are in trouble. We may not look at credit history for every loan with repeat borrowers (We do not pull credit reports for pre-approval applications). We are a hard money lender, so our loan decisions are primarily based on the underlying value of the property (“hard asset”); However, even as hard money lenders, we do consider recent credit related behavior among other factors.
Can I borrow money from other parties for other expenses?
As a Colorado hard money lender, we will only make loans as the first and only lien holder on a property. In our loan agreements, you will agree not to further encumber the property (e.g. no 2nd mortgage, other liens etc.). You should plan to have cash available for 3rd party closing costs (title insurance, closing fees), holding costs (insurance, taxes, utilities), property maintenance and cleaning expenses, staging expenses, cost overruns, other expected or unexpected expenses and rehab labor and material expenses (until you receive rehab draws, if you have a rehab draw account). If you borrow money for any of these purposes, it may not be secured/collateralized with the property or items attached to the property.
Do you look at the borrowers ability to make loan payments?
We closely look at the borrowers’ exit strategies. We do look at the borrowers ability to pay their expenses. Some of our hard money loans have payments of $0 until payoff (unless there is a default); Obviously, in such cases, $0 loan payments do not concern us, but we are concerned with your ability to successfully complete the project and have funds available for related expenses. If we do not think you can pay your expenses which may include utilities, insurance, monthly loan payments (if any), taxes, repairs (or some repairs before drawing rehab funds, if there is a rehab account), monthly loan payments (if any are called for), etc., and pay off your loan via the planned exit strategy we will not make the loan.
Will you take second position (second mortgage or other second lien arrangement)?
In general no, we will only loan as the first and only lien holder. As the loan is a hard money loan we want the hard asset (i.e. the property) to be unencumbered by other loans, whether subordinate or superior to our loan. In some cases we require a first lien on the project property and may be secured by junior liens on other properties.
Will you roll 3rd party closing costs into the loan?
No, you will need to have cash available for 3rd party closing costs (title insurance, closing fees, etc.).
Can I roll the origination fee into the loan for Flash/Transaction Loans and Fix & Hold Loans?
Yes, as long as the loan meets our loan amount to value criteria and you want to roll in the origination fee into the hard money loan.
Will you roll your origination fee into the loan for Fix & Flip and Fix & Hold Hard Money Loans?
Yes, we will roll origination fees into the hard money loan as long as the loan meets our loan amount to value ratio criteria and you want to roll in the origination fee.
Do you charge pre-payment penalties?
None of standard loan programs charge a pre-payment penalty. We welcome your successful hard money loan payoff at any time. Custom loans that don’t conform to our standard loan programs could have minimum interest amounts, but typically do not.
Are payments due while I’m rehabbing a house?
(Question and answer applies only to Fix & Flip and Fix & Hold Loans) Besides the application fee, you will not owe us any money until you sell or refinance the property or until you extend beyond the initial term (typically 180 days), unless you default on the loan or choose to pay the origination fees upfront, rather than roll the origination fees into the loan. However, you will need to have cash available for 3rd party closing costs (title insurance, closing fees), holding costs (insurance, taxes, utilities), property maintenance and cleaning expenses, staging expenses, cost overruns, other expected or unexpected expenses and rehab labor and material expenses (until you receive rehab draws, if you have a rehab draw account). On the first day of the extension and every 30 days thereafter, you will owe an extension payment equal to 0.3% of the outstanding principal amount at that time. Accrued interest is added to principal every 30 days.
Will you lend on a short sale property?
Yes, but you need to comply with Colorado and other laws regarding the purchase contracts, process, etc.