FAQs About 100% CLTV
Q: How old can a residential appraisal be?
A: This is case by case; 9 months max.
Q: How long does it take to get an appraisal?
A: Depends on property type. For residential a few days, for commercial properties that are rural it can be a few weeks.
Q: How soon do you need an appraisal?
A: Right away.
Q: Who pays for the appraisal?
A: The borrower
Q: How much do appraisals cost?
A: For Residential (SFH), it may start between $200 – $400. For commercial, depending on the size of the building, usage, and other factors, from $2,000 – $6,000. For those in the multi-million rage, or with a lot of (environmental) issues, it could be $15,000.
Q: What sort of appraisal is used?
A: There are 3, main, approaches.
- There is the sales approach: What are other comparable sales in the neighborhood?
- There is the cost approach: How much would it cost to reconstruct the building?
- The Income approach, which is how much a property makes.
Most of the time, we focus on Sales approach. Case by case for the others.
Q: What can the borrower do if the appraisal comes low?
A: There are a few options.
- Talk to a real estate agent and find different comps.
- Have appraisal reviewed
- Order a new appraisal if the appraisal is that far off.
Q: Can borrowers request a discount for multiple properties?
Q: Can a borrower use a BPO?
A: Yes, but the LTV will likely be lower.
Q: What is covered in the LOI?
A: Terms, Loan Amount, and Interest Rate
Q: What are the two requirements on the LOI?
A: Appraisal and Clean title
Q: Will you also get a commitment letter?
A: No, just the LOI
Q: Are there any commitment/upfront fees?
A: We do not charge commitment/upfront fees. There are some out of pocket costs, however, that include:
- Loan documents (to law firm when ready to close)
- Appraisal (starts at about $400 for SFH)
- Title report.
Q: Will you use another company’s title and appraisal?
Q: How long is an LOI valid?
A: 15 days.
Q: What land can you lend on?
A: Populated areas, infill, Florida or the West Coast and The first five acres (10 – 15 may be on case by case).
Q: Will you lend on parking lots?
A: Depends on where. If it is income producing, and the LTV is 20 – 40%, then yes.
Q: What about a cemetery, golf course, RV park, race track or working cattle ranch?
A: Is there a building on it? What is the building worth? It must be income producing. The LTV will be lower.
Q: What if I object to the rate?
A: We would like to keep the following in mind with you:
- This is a Hard Money Loan and non-conforming.
- What have other lenders have said?
- We look at “B/C type borrowers.” We help those with poor credit, no down payment, and very little out of pocket costs. LOIs can be difficult to obtain, especially with other lenders.
- Can you let us know what other rates you have been provided, to compare with ours?
Q: What if I need More Money?
A: First, we will ask you what you have done with the current amount. Second, if you are current for 2 – 3 months they can get more.
Q: What type of photos are need?
A: Photos should be broad, open shots. They should also be high resolution. Also, please make sure the photos aren’t blurry, over or under exposed, and that we can distinctly make out what is in the photo.
Q: Where should photos be?
A: We need photos of all sides of the building and of all the rooms.
Q: Can you use a primary residence for a loan?
A: Yes, if the borrower moves and and can provide updated driver’s license, utility bill and a lease, or if it’s for business purpose (the residence is used for business).
Q: What are a few of the items on a title report?
A: Property Taxes, Mortgagee, and Liens or Judgments.
Q: Why do judgments and liens have to be paid?
A: So that lender can have first position on the title.
Q: What happens if the liens have been paid but still showing on title?
A: The borrower has to provide proof and get them removed.
Q: Unpaid child support can show up on title report.
Q: How long can it take to clear title?
A: A few days to few months
Q: Who is Title Insurance to?
A: Title Insurance must be in the lender’s name.
Q: Can Contractors can place liens on titles for unpaid work?
Q: What are the 3 costs borrowers may have to pay out of pocket?
A: You will need to pay:
- Loan Document Fees
If you have the first two items (and the appraisal is within 6 months for residential, or 3 months, commercial, generally), then you will only need the loan document fee.
Q: What is the doc fee, and how much?
A: The attorney’s fee to create loan documents for the mortgage/deed of trust, about $1,500.
Q: What is the average cost for title insurance?
A: $525. If you already have a clear title, then provide this, as part of your package.
Q: When do the borrowers need to pay for the appraisal?
A: When they sign the LOI/immediately.