Texas Hard Money Loans are provided to borrowers from private lenders who are not required to follow the same rules, guidelines or processes as traditional lenders. For this reason, borrowers need to familiarize themselves with the common fee structure that is associated with most Texas Hard Money Loans. In most cases, the fees are not unreasonable but they are higher than traditional loans because hard money offers benefits over traditional lenders and because they are an option for those who cannot qualify for a traditional loan.
The most noticeable increase in the cost of Texas Hard Money Loans is the higher interest rate. In some cases, the lender will charge 10% to 15% for an average loan. And if there is a great deal of risk involved in the loan, the rates can go even higher. In addition, there are normally points just as you would pay on a traditional loan. A single point is equal to one percent of the loan amount. This is a way to calculate fees in a simple manner and provide the lenders with a flat rate payment for his or her services.
Other lenders will choose to break the fees out by service or feature. This could be shown as underwriting fees, processing fees and document preparation fees. Other lenders will group these items together and call it administrative fees. If the lender was referred to you by a broker, then there could also be fees involved to pay the broker for his or her services. If the lender uses a service to collect payments and keep the records for the loan, you will also see a PML service fee. In most cases, the lender will select one method or the other to charge borrowers but because there are few guidelines on Texas Hard Money Loans and lenders, some lenders could choose to use a combination of both flat fees and additional itemized fees.
Because the fee structure is up to the discretion of the lender, it is imperative that you request a complete accounting of all fees and expenses associated with your loan. This will allow you to compare the total cost of each loan that you are considering. In addition, you should ask for details in writing about any penalties or other payment fees that could be imposed during the life of your loan. This can include late payment fees as well as early repayment penalties.
Even though hard money is a private loan, the contract for the loan is still a legally binding document. For that reason, it is very important for you to read and clearly understand all of the terms of your loan before you sign the paperwork. Once you sign the document, you are legally bound to follow all of the items in the agreement and failure can result in the forfeiture of your property.
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.