Investor FAQ’s
Q: What is the ‘Rehab Amount’?
A: It is the monies needed to improve the property to the After Repair Value (ARV).
Q: What is the ‘After Repair Value (ARV)’?
A: It is the value of the property when all the repairs are completed.
Q: What is the ‘Total Funding Amount’?
A: This is the Amount that will be listed on the Mortgage and Note. This is also the max amount that will be wired to the Title company for funding prior to the closing date.
Q: What does ‘Total Funds to Borrower’ mean?
A: It is the monies the borrower will NET at closing after Fees/Points are paid or financed.
Q. What is a Balloon Mortgage
A. Full Loan amount plus interest and fees are due on the Balloon Due Date
Q. What is a Point
A. This is 1% of the total loan amount and is typically financed into the loan. Investors get paid interest on the point as well.
Q. How does Good Faith Financial, LLC get paid?
A. Good Faith Financial, LLC gets paid on the Interest rate spread (typically 2%) and the Points Spread (typically 2 Points). The Spread is the difference of the total the borrower pays AND what is paid to Investors to utilize their funds.
Borrower FAQ’s
Q: What is a Hard Money Loan?
A: A hard money loan is any loan secured by a “hard asset” like commercial or residential real estate. A hard money loan is a first mortgage on investment real estate. A hard money lender looks to the property as the primary collateral as opposed to the borrower’s credit score or other factors. A hard money loan is an alternative to a traditional bank loan.
Q: How quickly can I close?
A: Our average close time is 5-10 days (depending on property, location, etc.…).
Q. How do I get started with a loan?
A. Complete the on-line application form and we will contact you typically within 24 hours (during normal business hours)
Q. What documents will be required from me?
A. We will need:
Accepted Offer to Purchase
Most Recent Month’s Bank Statements and/or documentation of other liquid Assets
Preapproval Letter from Lender
An application Filled Out*
Spreadsheet with Itemized list of Repairs and Time Frame for Work to be finished
At Least 3 Comparables used for Valuation and/or CMA*
If property will be in an LLC then:
Articles of Incorporation
Signed Operating Agreement for LLC
Q. What is a CMA?
A. A comparative market analysis is an estimate of your home’s value done by your real estate broker to establish a listing or offer price when you decide that you want to sell or buy a home or property.
Q. What are the Terms
A. Most Notes are 6 month Balloons (entire amount due) with No required Payments
Q. What is the rate?
A. Rate is Generally 15% Compounded Daily- This gets reduced to 12% if entire amount due is paid prior to Balloon date.
Q. Are there additional Fees?
A. Yes- there are generally 3 points (1 point equals 1% of the total amount financed) that are typically financed into the loan.
Q. Why is a preapproval typically required on a hard money loan?
A. Even on a Fix and Flip, borrower’s should have more than one exit strategy.