Points are typically 3, some lenders change more or less just depending on your situation.
Top Points on Loan Tips
- Experience matters. More experience means more LTV.
- Know how to calculate your break-even point.
- Interest rate reductions for buying points depend on the lender and the market place
- There might be tax benefits.
- Deciding between making a down payment and buying points will require careful running of the numbers.
- Most lenders have specific niches, shopping around can make a big difference in points.
- If your LTV is based on ARV and includes rehab, expect 5-6 points.
What are points
Points on a hard money loan are the fees the lender charges the borrower for providing the loan. Each point is generally equal to one percentage point of the loan. Oftentimes points are negotiable. Points may be in addition to loan origination fees and appear in your closing costs.
A point is a fee equal to 1 percent of the mortgage amount. For example, if you buy a house and need $120,000, 1 point would cost you $1,200. A lender can charge 1 point, several points or no points at all. Because hard money lenders assume higher risk, interest rates are higher than conventional loans and points are between 2-4%.
Knowing your best options is often a matter of experience. Partner with someone who knows the financial world can make the difference between making money or losing money.
Need more information? Everything can be obtained by searching online. This site is not specific to a particular way of flipping, it is common “industry” standards and practices only. But you are welcome to contact us – we are a members-only flipping and funding company.
Keystone Funding Network