As we’ve discussed in previous blogs, hard money loans have gotten increasingly popular in recent years. Since hard money loans are often funded by individual investors, they do not necessarily have the same qualifications as a bank entity would. As a borrower, you should read and understand the term sheet before committing to a loan.

Things you should pay attention to in the term sheet:
— Know and understand how much it is going to cost you to borrow money.
— Know what the monthly payment will be.
— Does the funding date align with your closing date?
— Is the loan a balloon? Are all the funds due back at the end of the term?
— Take note of the itemization of your down payment, origination costs, payoff fee(s), draw fees, or extension fees.
— What will the cash to close be? The actual amount of funds you will receive at closing.
— What is the default rate?
— Be sure to review the term sheet carefully. If you have any questions be sure to ask them to your lender or broker.

In short, you want to know how your loan works before moving forward with it!

At Murk Investments, we are local to the San Diego area and are comfortable working in this market better than a national or regional lender. We lend on properties in most San Diego markets. One of the most important factors we look at is the cash the investor is bringing into the deal. All of our loans fall under a 65% loan to cost.

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