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- How do you define "Private Money?"
"Private Money" loans or "hard money loans" refer to non-conventional real estate loans. They are usually funded by private money sources and investors not banks, pension funds, etc. Interest rates and points on such loans are usually higher. Terms usually range from 3 to 12 months. Private Money loans have one basic requirement, there has to be some substantial equity in the property to give the lender a reason to invest their funds in what could be an otherwise risky venture.
So, why would you utilize a Private Money lender? The property to be purchased might be presently vacant and in need of repairs. It may be an older property in a failing neighborhood which has the potential for revitalization. It may be a foreclosure and can be purchased on a short sale. Or you may just need a quick closing to secure a property before you find an investor/rehabber to which you want to flip the property. Or you may want to purchase a run down piece of property, rehab the property, and refinance it for rental income. In all these cases, you would need a Private Money loan because conventional financing is just not an option or it would take too long to secure. "Private Money" is just a cost of doing business and an effective method of doing business as a real estate investor.
- What states do you lend in?
North Carolina, South Carolina, Georgia, Tennessee, Alabama.
- Do I need good credit to get approved for a loan?
Our approval is based upon your credit score, funds available, and the value of the property you want financed. We look at your credit to get a feel for who is borrowing the money in order to rule out people who obviously never intend to pay anyone. We also look at the value of the property after it is repaired, the price you are paying for the property, and the cost of repairs. We look for ways to finance your investment, not for ways to turn you down.
- How long does it take to get approved for a loan?
Within 5 to 7 days after you have submitted your COMPLETE loan application and documentation, we can usually make a decision
- How long does it take to close the loan once I have been approved?
After your submitted property has been approved, it normally takes around 2-5 business days. Sometimes more, sometimes less. Many times it all depends on how long it takes to have a title search completed and schedule an appointment with the attorney for closing.
- Should I have an investment property under contract before I fill out the loan application form?
SDI Funding can pre-approve you for our loan program prior to your finding the right investment property. Our process is two-fold: first we approve the applicant, then we approve the investment property you are interested in financing.
- What is the term of the loan?
We write 3 month loans and can extend these loans for up to 6 months depending on your needs. The object of a Private Money loan is to either turn the property quickly or have it rehabbed and refinanced with a conventional lender. Since SDI Funding does not have any prepayment penalties, you may prepay the loan anytime you wish prior to the term of the loan.
- Do I have to fill out the loan application form each time I submit a new investment property for financing?
We save all loan documentation both physically and electronically and try our best to reuse it for future submissions. Periodically, however, we will ask you to update your financial information for our records.
- Do you pull my credit report each time I request a loan?
We will obtain your credit report when you submit your original loan application to us. After that, we will periodically review your credit as our business partnership continues. Normally we just look at the credit report pulled by your mortgage broker or bank working on your refinancing.
- How do I get refinanced to pay off the loan to SDI Funding?
If you are purchasing a property to rehab and rent, we can refer you to an SDI Funding Bank or Mortgage Broker Partner who specializes in permanent loans and deals with investors who own investment rental property.
- How can I find a property you will approve?
We can refer you to SDI Funding Referral Partners who offer competitively priced investment properties and help you select one which we could approve. From time to time we also have properties for sale that we had to take back from defaulted borrowers. We are not in the business of owning properties as a company, so we make it easy for our clients to buy them.
- What is the interest rate charged?
We try to keep our programs simple. Our interest rate is 1.25-1.5% monthly and varies depending on criteria that include borrower experience and liquidity, loan to value, credit score, and the current prime rate. Applicants who do not meet a minimum credit score of 650 require a co-borrower, lower LTVs, or cross-collateralization.
- What "Loan to Value" (LTV) are you looking for?
We will go up to 75% LTV for a “Subject To” or ARV, and 80% LTV for an “As Is” depending on credit score, and other relevant criteria.
- Can I get repair money to rehab my investment?
Yes. We fund all your repairs up to what the LTV will allow. We do require you to complete a detailed, itemized repair list of the repair work. An escrow draw schedule identifies the order in which the repairs should be made. After a certain percentage of the repairs have been completed and verified, the monies are withdrawn from your escrow account and forwarded to you.
- What is cross-collateralization?
If you have significant and verifiable equity in other properties, oftentimes you can allow SDI to place a lien on that property to help further secure your loan. If you credit is trending lower, if your deal is tight, or if you would like to undertake a significant Rehab project, then this is a good option to help get the deal pushed through.
- How many investment properties can I finance at one time?
Our policy is to start with one property until we have an established business relationship with you. As you become more experienced and have successfully completed a few loans with us, we can look at funding multiple properties as they are identified.
- Do I need to get an appraisal?
SDI Funding will review an existing appraisal from a qualified appraiser who is familiar with evaluating investment properties. The appraiser will determine the "after repaired value" (ARV). You will be required to pay for the appraisal.
- How does the escrow draw procedure work?
Each draw request will require an inspection to ensure that the work is completed in a thorough and professional manner. After completing a certain percentage of the required work, you will fill out a "Draw Request Form" and forward this to SDI Funding. We will schedule an inspector to visit your property and authorize the release of your escrow funds.
- How much of my own money do I need to put in the deal?
Points may be rolled into the loan subject to meeting our standard loan to value and credit criteria. You will need to make sure you have money in reserve to pay the monthly payments during the term of the loan.
- What is a credit card block and how does it work?
Instead of having to put substantial cash down on a property, in certain instances we offer the option to do a credit card block. SDI blocks, but does not charge, a certain dollar amount to the card. Upon successful refinance or resell of the property, and full pay-off, the charge is dropped. Only in the event of default would the block ever be converted into a charge. The great thing is the credit card company does not charge you anything for this in the interim.
- Do you require a survey?
Sometimes. If needed, the closing attorney or title company will provide that to SDI Funding and to you.
- Do you make loans on rental property?
Yes, we do loans on rental property. It is usually when the property needs to be rehabbed prior to being rentable. When the renovation is completed, you will need to have the property refinanced prior to placing a renter in the property. Your "Builders Risk/Empty Dwelling" insurance policy will not cover you or SDI Funding once the property is occupied.
- Will SDI Funding do an extension on my 3 month term loan?
If your payments are current and repairs are complete, we will provide extensions to your loan. The interest rate will be increased and additional points will be charged and collected at payoff.
- How much is the typical loan going to cost?
All loan transactions are different. The first loan we provide for you may be different than the third or fourth loan. How different will depend on the particular deal and the business relationship we have developed with you.
- How are the closing costs determined?
Closing costs have always been a mystery to borrowers unless you close numerous loans. We, at SDI Funding want you to understand where your money is going and what costs are involved before going to your closing. Traditionally, you might never see a HUD-1 Settlement Statement until you get to the lawyer's office. For that reason, we will provide you upon request a list of typical charges for the services provided by the closing attorney. If you have any questions after reviewing the charges, feel free to contact one of our representatives.
- How much will my payments be?
Your loan is an interest only loan. To figure your monthly payment, simply multiply the interest rate by the dollar amount you were funded (including any fees or costs which were rolled into the loan). Since the interest is computed on an annual basis, you simply divide by 12 (months) to get your monthly payment.
- What is a recast fee and how is it broken down?
2 accrued points from the first loan, 2 new points to initiate a new loan. The fee must be paid in order to keep the LTV in check for the refinance.
- Why does the loan amount change from what was on the approval versus what is on the closing documents?
Approval is prepared for a specific date. Interim interest will be recalculated for the actual closing date.
- What is your Mortgagee Clause?
SDI Funding, LLC ISAOA/ATIMA
107 W. Antrim Dr.
Greenville, SC 29607
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