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What types of properties will you lend on?

At this time, we provide hard money loans almost exclusively on non-owner-occupied residential properties. In some cases we will provide hard money loans on small commercial buildings. We typically will not lend on condos, townhomes or attached homes unless all units of the structure are included (i.e. both sides of a duplex, but not half a duplex). Our primary focus is the Denver metro area and we will also lend in Boulder and Colorado Springs. If we have experience with you, we may consider other areas in Colorado and other types of properties as well.

What are the typical hazard insurance requirements (for single family detached)?

  • Borrower must have and maintain hazard insurance policy with Good Funds Lending, LLC as the mortgagee during the entire term of the loan
  • Underwriter has a current AM Best Financial Strength Rating of BBB+ or better, or a current Demotech Financial Strength Rating of A or better
  • Typically for a single family detached house a vacant dwelling policy commonly known as ISO “Special Form” or “DP-3” (without deletions or reductions) and including coverage for vandalism, and malicious mischief (including minimum coverage amounts and deductions do not exceed $5000) or other policy forms which may include endorsements such that policy includes all perils and provides equivalent or increased coverage as a Vacant Dwelling Special Form policy described above.
  • Endorsements must be included such that there are no gaps, exceptions, nor reductions in the above described required coverages related to renovation, construction or completion of renovation or construction, nor other gaps, exceptions, or reductions.
  • Policy must be for replacement cost (not actual cash value also known as 'ACV' nor Agreed Value)
  • Hazard Insurance Policy must include what is commonly known in the property insurance industry as a “Standard Mortgagee Clause”
  • The mortgagee must receive written notice at least 30 days prior to any changes to the policy or listed insured parties. The mortgagee must receive written notice at least 30 days prior any non-renewal or cancellation of the policy for any reason other than non-payment. The mortgagee will receive written notice at least 10 days prior cancellation of the policy for non-payment.
  • The hazard insurance includes at least $500,000 to $1,000,000 of liability coverage depending on the project and the property
  • Required structural/dwelling coverage amounts varies but typically 90% or more of the estimated after rehab value of the property (and includes coverage for other structures if other structures exist such as unattached garages and decks)
  • The hazard insurance is not a homeowner policy
  • Proof of coverage or insurance binders including all requirements must be provided to Good Funds Lending, LLC prior to closing including hazard insurance agents/brokers are required to complete and sign a hazard insurance coverage confirmation form
  • A flood insurance policy is required if the property is in what we consider to be a high risk flood area.

Do you have any preferred vendors for title or hazard insurance?

We do not require you to use a certain title company or hazard insurance company, as long as the corresponding requirements for hazard and title insurance are met. Here are some companies our people have worked with successfully in the past; however, we make no representations or warranties about these companies. You should select the vendor that best meets your needs (provided they meet the requirements set forth in the loan requirements and documents).

When do I have to decide about the optional extension on a loan?

The extension automatically occurs after the initial term (typically 180 day period) unless you have paid off the loan or there has been a default. On the first day of the extension period (typically day 181), your extension payment of 0.3% of the outstanding principal amount (includes any accrued interest that has been added to the initial principal) is due. (extensions only available for the Fix & Flip and Fix & Hold loans).

How is ARV (after repair value) estimated?

We are a private hard money lender. We do not use an appraiser. Instead, we review your proposed projects. We compare your proposed finished product with similar properties sold. Typically local sales in the last 6-12 months are considered.  Then we may make adjustments for properties currently for sale. We try to estimate a price likely to produce a sale within 30-45 days. One benefit of using a local private Colorado hard money lender is that we not use appraisers. That can save you money. Also, we are free to consider relevant information from borrowers. If a recent appraisal is already available we will look at it.

Why does it matter to me that you are a “private” or single source hard money lender?

Because we are private hard money lender with a single source, we are the final decision makers and do not need to consult with anyone else in making our lending decisions, restrictions and rules. This allows us to act quickly. Also, we don’t have to promise outside investors higher rates of return (charge higher rates). Good Funds Lending, LLC provides hard money loans for non-owner occupied properties in the Colorado Denver Metro Area.

Why are your rates lower than the typical 3 to 4 points (i.e. 3-4% origination) and 14-15% interest?

We work hard to keep our costs down so we can provide very competitive rates. We also try to minimize unnecessary costs for our borrowers (e.g. single family properties do not require an appraisal).

  • We use one source for funds, so we are the final decision makers and do not need to consult with or comply with anyone else in making our lending decisions, restrictions and rules. We don’t have to compete for additional money sources that may require higher rates.
  • We work to keep our overhead low.
  • We underwrite in-house and don’t need to spend resources communicating back and forth with other parties.
  • For rehab/ fix and flip loans we look at borrowers’ experience and qualifications to lower risks and costs to all parties.

Why can’t I live in the property while I’m rehabbing it (or my family, employees, etc.)?

If you (your family or your employees) are living in the property (single family residence or a 2-4 unit residential property) or the loan is for personal, family or household use, the loan is classified differently by federal and state law and we would not be allowed to offer these loans or would have additional process and administrative requirements. Therefore the restriction that you, your family and employees may not occupy, reside in, or live at the property is strict and is expressly prohibited in our loan agreements. Additionally we like lending for investment purposes only and do not want to be put in the position of ever having to potentially foreclose on someone’s home.