FREQUENTLY ASKED QUESTIONS
Q: Will you lend on a house that is my primary residence?
A: No. Hard money loans are commercial loans, which means they are business to business. We, by law, cannot lend on personal, homeowner occupied properties.
Q: Is there prepayment penalty associated with the loan?
A: No. You can repay the hard money loan prior to its maturity date with absolutely no additional fee for prepayment.
Q: I have a HELOC - shouldn't I just use that?
A: There are many ways to fund a deal and every method has its tradeoffs. Funding a deal with a HELOC from another property is a great way to fund deals. The downside is, real estate investing comes with some level of risk. If, for whatever reason, the deal sours then your primary residence could be on the line if you fail to make the payments. Let's suppose that things don't get quite that bad - at the very least, your good credit could be on the line if you fail to pay the HELOC payments on time. Finally, let's assume that you have a $100,000 line of credit on your personal residence. If you max out that line for the purpose of funding a deal - you can be assured that will have a very negative effect (all be it temporary) on your credit score. When the balance on a line of credit goes over 50% of the limit, your FICO score goes down.
Q: What documents do I need to get started?
A: Usually you will need 2 years of tax returns, a recent bank statement showing capital, and a completed personal financial statement. If you are pre-qualified, we will also pull a credit report.
Q: How much money do I have to put in the deal?
A: We'll lend 90% of the purchase price and 100% of the rehab. This is much more than most HML's will lend, but it's not quite 100%. You will need to bring 10%, plus your closing costs, plus origination fees to the table. Closing costs vary across the country, so check with your local investor friendly title attorney for typical closing fees.
Q: Where do you lend?
A: We currently focus in Maryland, however, we can lend in most states and the District of Columbia.
