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Common Up-front Fees in Hard Money Loans You Should Know About


paperfree Aditi Bansal

Updated on Friday, May 19, 2017

Like all other conventional loan providers, commercial hard money loans also charge a loan fee before they issue you with funds. Depending on the nature of your loan and your commercial hard money lenders, you can be subjected to various up-front charges.

tags  #Up-front expenses  #Commercial hard money loans #

 

As a real estate investor, you will at one time need a commercial hard money loan to either purchase property or to remodel a property. Just like all other conventional loan providers, commercial hard money loans also charge a loan fee before they issue you with funds. The charge is measured in points whereby one point is equal to one percent of the loan amount. The number of points that you get will mostly depend on the complexity of your hard money loan, and the agreement between you and your commercial hard money lenders.</H>

Depending on the nature of your loan and your commercial hard money lenders, you can be subjected to some or all of the following up-front charges:

1) Appraisal Charges

This charge goes through your commercial hard money lenders to the appraiser.

2) Credit Report Charges

The credit report charges are also handled by the commercial hard money lenders to cater for the cost of the credit report.

3) Commercial Hard Money Loan Underwriting Fees

This amount is fixed, and it goes directly to the commercial hard money lenders to cover all the expenses incurred in the process of underwriting the loan. The commercial hard money loan underwriting fee can range anywhere between $750 and $2,500.

4) Referral Charges

It’s not uncommon for commercial hard money lenders to refer their clients to other commercial hard money lenders in case they find that another lender may be more suited to handle the loan at hand. In such a situation, you can be subjected to referral expenses which will be transferred to the original commercial hard money lenders.

5) Document Preparation Expenses

In case your commercial hard money loan lenders have outsourced the task of document preparation to another company, these fees may also be passed through your commercial hard money loans lender as well. However, some commercial hard money lenders prepare these documents in-house.

6) Late Income Fees

It’s important that you adhere to all the fee schedules that have been indicated in the promissory note to ensure that you don’t incur lateness expenses.

7) Commercial Hard Money Loan Servicing Fees

In most cases, the commercial hard money loan servicing fees are set as a percentage of the value of the loan, and in some other cases as a flat rate that should be paid every month during the life of the loan.

8) Equip Yourself before Consulting Your Commercial Hard Money Lenders

It’s always important that you have a serious and thorough dialogue with your commercial hard money lenders about all expenses that you may incur throughout the hard money loan application process, to ensure that you don’t incur any unexpected or surprise fees. Experienced and reputable commercial hard money loan lenders will brief you on all up-front fees, and working with such lenders during the course of your real estate projects will help you to get more insight about the system and build a solid foundation of trust and knowledge. Only contact commercial hard money lenders when you are ready to set your project in motion, and after confirming the up-front expenses, you will incur in your loan application.



This page with a focus on Up-front expenses, Commercial hard money loans was shared by Aditi Bansal.

 
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