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Fix & Flip Loans

Do You Offer a Hard Money Second Mortgage to Cover Down Payment and Closing Costs?

This question has come in through the website dozens of the times over the years from prospective house flippers who are short on funds to close their transaction. What they’re asking for is something called “Gap Funding,” which is a hard money second mortgage that “fills the gap” when not having funds for down payment and closing costs.

Picture of Ted Spradlin Ted Spradlin Aug 22, 2022 9:44:50 AM

What is Dutch Interest for a Hard Money Construction Loan?

Some private lenders use a method of interest accrual known as “Dutch interest” for a hard money construction loan which calculates payments based upon the entire loan amount rather than payments on partial advancements in a construction loan.

First Capital Trust Deeds works with a few hard money lenders in California, Oregon, Washington, and Florida that use Dutch interest. Most construction focused loans originated by FCTD, however, feature “New York interest”, where interest accrues on construction reimbursement advances rather than on the entire loan.

Picture of Ted Spradlin Ted Spradlin Jan 2, 2019 9:49:03 AM

The Hard Part About Obtaining a Hard Money Construction Loan

A hard money construction completion loan seems pretty easy and straightforward at 65-75% of as-is value of a partially finished home. And typically they are easy to get approved when it comes to the lender’s underwriting. Builders and house flippers, along with hard money lenders, often run into challenges from the title company’s issuance of a 2006 Alta Extended Lender’s Policy with 125% coverage.

Picture of Ted Spradlin Ted Spradlin Mar 11, 2016 9:06:45 AM

When Hard Money Borrowers Are Stuck On After Repaired Value

Every week or so, we receive a phone call or email inquiry from a prospective house flipper inquiring about our After Repaired Value (ARV) hard money fix and flip financing programs. And I have to admit that as soon as I hear someone talking about an ARV loan, my ears perk up because I know that it’s going to be hard to get the person off their insistence on an ARV-based loan.

Picture of Ted Spradlin Ted Spradlin Mar 10, 2016 7:43:34 AM

What First-Time House Flippers Need to Know About Hard Money

Each week it seems that I talk to an aspiring first-time house flipper who is interested in taking out a hard money loan to finance their very first acquisition. Most of the time, I’m the first or second mortgage lender they’ve spoken to about hard money fix and flip financing. Prior to our conversation, their only exposure to hard money financing was through the real estate coaching program that they’ve been enrolled in over the past few months, online forums, or a conventional mortgage broker. And judging by the questions I’ve been asked, it seems that the coaching programs aren’t doing a very good job of conveying the hard truth about hard money loans.

Picture of Ted Spradlin Ted Spradlin Mar 9, 2016 11:31:52 AM

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