Loan PurposeFacilitate the acquisition and repair of a property (for Fix & Flip, Fix for Refi and Hold).
Overview Hard Money Rehab Loan (Fix & Flip, Fix to Refi) Loans
|Interest Rate (based 360 day year)||12% (360 day basis. Only pay for the days used.)|
|Prepayment Penalty||None – Only pay interest for the time used|
|Origination Fee||2.00% for 6-month loans|
2.25% for 9-month loans
2.50% for 12-month loans
3.00% for 18-month loans
|Documentation Fees To Good Funds Lending, LLC (only charged if the loan is originated)||$1000|
|Pre-Approval Application Fee||$0|
|Appraisal Fee||$0 (Not Applicable)|
|Full Application Fee||$0|
|Maximum Loan Ratios*||-Single Family Detached: up to 70% of est. after repair value|
-Condos & Townhomes: up to 65% of est. after repair value
|Maximum Funds Toward Purchase*||Up to 85% of est. current market value|
|Maximum Funds Toward Rehab/Repair*||Up to the lesser of: (1) Expected Cost of Rehab; (2) $150,000; or (3) Loan Amount - Funds Toward Purchase - Origination & Doc Fees|
|Typical time required between submission of completed application and closing||10 business days for borrowers new to Good Funds Lending, LLC|
5 business days for borrowers who have previously borrowed from Good Funds Lending, LLC
|Loan Term Length Options||6 months|
|Regular Monthly Payments||1% of Initial Principal|
Due the last day of each calendar month
First month's interest is typically prepaid at closing.
|Minimum Interest Period||1 day|
|Minimum borrower funds required at closing (if loan within required ratios)||Lender Origination Fee, 3rd party closing costs and hazard insurance premium if not prepaid prior to closing (seller concessions can not be used to offset these borrower contributions)|
|Closing/Underwriting Fees To Good Funds Lending, LLC||$0|
|Draw Request Fee (Only for loans with Rehab Draw Accounts)||$125|
|Default Rates/Fees/Penalties||See Loan Documents|
*Loan to value ratios may vary by the type of property, loan type, loan size, and other specifics.The borrower will need additional funds during the loan to pay for items including without limitation taxes, utilities, insurance, property maintenance and cleaning expenses, staging expenses, cost overruns, other expected or unexpected expenses, and all repair/rehab costs. In the event of default, there may be additional fees for administrative, collection, legal, insurance, lien payoff, or other expenses. More detail provided in loan documents.
Rehab Draw AccountsIf funds are being borrowed from Good Funds Lending, LLC to pay for some or all repairs, we will establish an account (Rehab Draw Account) to hold such funds to be drawn upon by the borrower after the completion of specified work items.
- A Work Schedule containing specific work items (repairs and renovations) is incorporated in the loan documents
- Disbursements from the Rehab Draw Account require that draw request is submitted specified the work items have been completed and the borrower submits the related signed lien waivers, receipts, proof of ‘finalled out’ permits if permits were required and an opportunity to inspect the completed work items (pictures showing the completed work items installed are not required but are appreciated)
- Borrowers must have funds to pay for some of the work items prior to receiving the related draw disbursements
- There is a $125 non-refundable draw request fee for every draw request submitted (we typically expect a total of 2-5 disbursements per project)
Qualifications & Requirements
The primary considerations in extending a loan commitment are the property value, the perspective borrowers’ relevant experience, and the perceived risk by Good Funds Lending, LLC. The following represent a subset of qualifications and requirements for loan consideration. The qualifications are considered collectively and loan commitments are not guaranteed even if all the qualifications and requirements listed here are met.
Subject Property (Asset) Requirements:
- Municipal water supply for domestic water (not well systems)
- Municipal sewer services (properties with septic may be subject to lower loan to value ratios in addition to requirements for inspections and reports)
Borrower Qualifications/Requirements:Typically for the highest loan to value ratio (largest loan amount) and/or lowest rates, a loan requires 2 or more acceptable human borrowers (in addition to the entity that holds title, if the entity is the property owner). If an entity holds title (i.e. is the property owner), typically a super-majority of the ownership and voting control is required to be cosigners and often all direct and indirect owners that own more than 10% of the entity are required as cosigners. Typically the maximum Loan To Value ratio is 5%-10% lower with a single human borrower, but other terms may also change.
- The borrower on title must be a corporation, LLC or partnership, registered with the Colorado Secretary of State.
- If the property will undergo rehab, at least one cosigner on the loan must have completed at least 2 rehab projects of similar scale or large in the last 3 years (or have other qualifications which the Lender believes sufficient).
- No minimum income required; however, the borrowers should have sufficient funds (savings and/or income) to pay for closing expenses, hazard insurance, utilities, and property taxes and rehab expenses prior to draw disbursements as well as sufficient funds to pay for unexpected expenses and cost overruns.
- There is no minimum credit score, but credit histories are reviewed primarily focusing on the following: Debts that are currently past due, outstanding judgments, a bankruptcy that has not been discharged, chronic late payments (a few late payments typically do not disqualify borrowers).
- Criminal conviction since the age of 18 years old (except some traffic violations and some misdemeanors) disqualify a borrower.
- Current, past or potential involvement with lawsuits, bankruptcies or foreclosures may also disqualify a borrower depending on circumstances.
- Income tax believed to be past due by the corresponding government may also disqualify a borrower.
Title & Settlement Agent Requirements:
- Use of a settlement agent and title insurer that is good standing and licensed in Colorado
- ALTA Loan Policy 06-17-06
- Loan title policy typically must include expanded coverage including the following form endorsements: Colorado 100, ALTA 8.1, Colorado 116/ALTA 22, Colorado 115.2/ALTA 5.1, and Colorado 100.29 (or corresponding equivalents for property type; endorsements and requirements may vary by property type and other specifics), and also sometimes one or both of: Colorado 110.8/ALTA 6.2 and Colorado 103.1 (Endorsements required for loans secured by properties that are not single family detached may vary)
- The title commitment is acceptable to us and the title insurance underwriter provides a verified closing protection letter prior to the closing
- The title commitment for the title loan policy must remove Standard Printed Exceptions (typically 1-4) and the Gap Exception. If there are rehab funds in the loan, then Standard Printed Exception (4) may be modified to state any lien or right to a lien, for services, labor or material furnished, incurred and imposed after the date of closing.
- Good Funds Lending, LLC loan must be a first lien on the property (except for property taxes not yet due and payable)
- The title commitment for the title loan policy must remove any exceptions not acceptable to Good Funds Lending, LLC.
- Settlement agent must execute and return Good Funds Lending, LLC closing instructions at least 1 full business days prior to closing.
- Title Insurer must provide and verify an acceptable closing protection letter to Good Funds Lending, LLC at least 1 full business days prior to closing.
- Settlement Agent must supply acceptable settlement statements to Good Funds Lending, LLC at least 1 full business days prior to closing.
Hazard Insurance Requirements:
- 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.
Additional Requirements & TermsThe qualifications and requirements listed on this page are not comprehensive. Additional requirements, terms and conditions are provided in the loan documents. In the event that loan documents are inconsistent with the information on this site the loan documents shall govern as neither this site nor the information contained within represent an offer.
NotesEstimated values, estimated costs or other judgments related to similarity referred to above are based on our (Lender's) estimates and opinions. We typically estimate market value of properties based on what we believe will be a price likely to produce a sale within 90 days. We are a private lender seeking:
- To provide loans beneficial to the community, the borrowers, and Good Funds Lending, LLC
- Long-term relationships with ethical people
- Borrowers strategically using hard money, often because banks and credit unions are too slow or unreasonable to capitalize on an opportunity.
Hard money is not always the best solution. You should consider other options before using hard money.
Our Colorado hard money business is aimed at helping smart and ethical borrowers, where our borrowers use our hard money loans only when appropriate and as a part of their financing strategy.
Answers to frequently asked questions regarding Good Funds Lending, LLC and Colorado hard money loans are available on our Frequently Asked Questions Page.
Colorado hard money loans for single family, multi-unit residential (2-40 units), operating/occupied commercial , and operating/occupied industrial properties in the Denver Metro Area (residential properties must be non-owner occupied).
Colorado is a wonderful place to live and do business. We are happy to be a part of the Denver business community.