FREQUENTLY ASKED QUESTIONS

For Owner-Occupants, if you have cash for the down payment, loan fees, closing costs AND proof of income that less than 45% of your gross income (before taxes) will go toward your proposed BRADLOAN payment, existing car payments, student loan or credit card payments, regardless of your credit issues, you will most likely qualify for a Brad Loan! It’s just that simple. For Investors, proof of down payment, working capital funds, and—if applicable—a copy of lease(s) .

NO PROBLEM if you have:

• Low Credit Scores – OK!
• No Credit – OK!
• Bad Credit – OK!
• A Foreclosure – OK!
• A Short-Sale – OK!
• Bankruptcy – Ok!
• Credit Issues From The Past – OK!
• Non-Citizen – OK!
• ITIN Number – OK!

No up front cost for loan pre-qualification, however, once you have a property under contract or you are wanting to refinance, and you have decided to move forward to purchase/refinance the property with a BRAD LOAN, we require a $535 non-refundable application fee payable to eMortgage Inc. (cashier’s check, cash or money order) and a separate cashier’s check, cash or money order made payable to Mark Huffman, the appraiser (typically $350 for most single family homes under $350,000). If you choose not to close your loan for any reason, you will forfeit the $535 application fee. Your appraisal fee becomes non-refundable at such time as appraiser commences the appraisal process.

Should BRAD choose not to close on your loan, your application fee will be fully refunded to you.

YES, your home will be titled and the deed recorded in your name with the County Recorder in the Public Records. You will own the home with Title recorded in your name from day one, along with the recorded Mortgage (Deed of Trust) to secure your property as collateral for the loan we gave you.

A mortgage broker charges an origination fee commonly referred to as points, it is considered a “fee” to entice the lender to offer a lower interest rate. While we do not give tax advice, “points” also known as “Origination Fees” are usually fully tax deductible as prepaid interest on a purchase. They are usually deductible on a refinance as well, but usually spread out over the term of the loan. Monthly mortgage interest paid is also normally deductible on your taxes as well. Please consult your Tax Advisor for further information on these matters.

A “point” equals one percent of a loan amount. For example, one point on a $100,000 loan is 1% of $100,000 which equals $1,000.00. Points are charged on the loan amount, not on the total purchase price. If you were buying a $100,000 home but only taking out a $70,000 loan, and there was an 4 point origination fee, you would take 4% of 70,000 which equals $2,800. The money you put down on the purchase reduces the total loan amount. So the more you put down the less you pay in points.

There are typically 4 additional loan fees. They usually total at about $1920 and include the following:

• Loan Application ($535) covers the cost of gathering all your information and data, discussing your different loan options, evaluating your circumstances, evaluating collateral, and discussing and determining which BRAD LOAN is right for you. It also pays obtaining a preliminary title report, work with the title company, working through title issues with the escrow officer, work done with realtors, insurance agents, appraisers, gathering up borrower’s documentation, etc, and coordination of all the previous mentioned functions and people to help bring your loan to completion.
• Underwriting ($595) is reviewing and assessing information about you and the property to determine if the loan is viable. In underwriting we review the purchase contract and any applicable addendums, credit report, appraisal, the application, the flood certification report, back up documentation, all to determine if the loan is an acceptable risk.
• Document Preparation ($395) is the preparation of your loan documents for closing.
• Lender Inspection ($395) is part of our due diligence when the lender makes a site visit to the subject property and neighborhood. This helps to determine if it is the kind of property we are comfortable with as collateral for the loan.

You will also have third party costs and expenses (typically $3,000 to 3,800) which include the following:

• Title Fees which include title insurance, a lender’s title policy, eDoc Fees, Courier Fees, Mobile Notary Fees, Escrow Fees, Wiring Fees, Document Recording Fees, etc. Depending on purchase price and loan size, these fees typically range between $900-$1500.
• Loan Servicing Set Up Fees charged by the account servicing agent (typically around $225)
• One year’s prepaid home owners insurance (for homes being bought for $40,000 to $200,000 , insurance seems to run in the $400 to $1,200 per year range)
• Appraisal fees paid to an appraiser (usually $350 to $450)
• Tax service fee ($85) paid to a title company to keep account servicing up to date on the subject property’s real estate taxes and their status.
• Pre-paid prorated interest (depends on the day of the month you close your purchase or refinance)
• Initial deposit to the impound account as a cushion toward future real estate taxes and insurance.
• Wiring fees ($30 to $60) charged by the lenders bank to wire your loan funds to Title.
• Credit Report ($18 to $38) fees charged by the credit reporting agency.
• Flood Certification ($18) to determine if your property is in a flood zone and therefore requiring flood insurance, as well as charges from
• Courier services ( typically $30 -$60) shipping documents between lender, title company, and in some cases, the borrower.

The estimated total of these fees typically range between $3,000 and $3,800 and they are required for almost every loan. The above are an estimated range of fees for loans under $150k. Your actual fees may vary.

Who keeps track of my payments, maintains my impound account to pay my insurance and taxes when due? Why do lenders usually require impound accounts?

We set up your loan servicing with a third party “Loan Servicing Agent”. Regardless of the Title Company your loan is closed at, we use Evergreen Note Servicing to service your mortgage. You are assigned an account number, and are sent a monthly mortgage statement in the mail. You mail or choose from the payment option and mail your payments directly to the Loan Servicing Agent, they process your payment, retain the amount to be held in your impound account to pay the real estate taxes and insurance when due, and forward the interest (and principal if applicable) payment on to the lender. They see to it that the extra money you send in each month for taxes and insurance (the impound account) is paid out timely to insure both you, and the lender.  Your insurance and taxes are paid when due and kept current. Unpaid taxes and insurance creates additional exposure and risk for the lender, so lenders usually require the set up of an impound account to be sure insurance is keep current, helping protect their collateral against uninsured fire or other such hazards as well as insuring funds are set aside to pay real estate taxes to prevent an occurrence of unpaid taxes which become a lien on the collateralized property.

The Loan Servicing Agent keeps track of your payments and how much you owe. They also send you a year end statement reporting to you how much you have paid in interest, taxes and insurance to use for your income tax deductions.

In the event you want to pay off your loan, whether due to sale or refinance, or any other reason, you, or the Title Company you are working with for your sale or refinance transaction, would contact the Loan Servicing Agent for the “payoff” statement, and the payoff of the loan would be made to the Loan Servicing Agent who would in turn release the lien from your property and forward the payoff funds to the Lender.

Monthly payments, balloon payments, and payoffs are all made and accounted for through Evergreen Note Servicing, a 3rd party loan servicing agent. All monthly payments to include an estimated $26 to $38.00 Arizona hard money lenders loan servicing fee and impounds of 1/12 taxes and insurance. Borrowers will receive annual statements for tax purposes detailing interest, taxes and insurance paid as well as impound account adjustments.

What if I sell or payoff my loan and there is unspent money in my impound account? Under ordinary circumstances, any unspent funds in your impound account not previously used to pay your insurance and taxes will be refunded to you directly by the Loan Servicing Agent. This is your money. (In events of foreclosure, Deed in Lieu of Foreclosure, or other default, there may be circumstances where impound balances may be applied toward money owed to the lender).

If you make payments with both interest and additional funds to apply toward the principal, this is called an AMORTIZED payment, or AMORTIZATION. Car loans are almost always amortized loans. If a portion of your payment is principal, and you make the same monthly payment, your payments are first applied to the interest and the rest to principal. Since you only pay interest on the amount of your balance, as you pay down your loan balance with your monthly principal payments (in addition to the interest), less of your monthly payment goes to pay the interest (because every month you owe less) and more of your payment applies to your principal, paying your loan down faster and faster each month. Just like a car loan. After a period of time, you owe nothing; your loan is paid off and your home is “free and clear”.

An interest only loan means you only have to pay the interest due each month, BUT you have the option of adding extra funds to your interest payment to be applied to principal which lowers your principal balance, therefore lowering your monthly interest charges. An amortized payment requires you to pay principal as well as your interest each month. In either event, you are only charged interest on the amount of your principal balance. Any extra money paid over and above your monthly interest charge is applied to pay down your principal balance, resulting in lower interest charges the following month.

Monthly payments are due on the 1st of each month and late after the 5th of each month. Daily late fees are charged at 2% per day of your principal and interest payment retroactive to the payment due date. For owner-occupied loans there is a 4% late charge based on the principal and interest payment which are due by the 1st of the month and late after the 15th of the month.

Yes, however our loan decisions are not based on your credit score. Running your credit report helps us to know our borrower better, and verify your other financial obligations. We will not run your credit report until you authorize us to do so.

Balloon payment means the entire unpaid principal balance plus any unpaid interest and or late fees are all due and payable at one time on a specified date. If your exit strategy in paying off your loan is not by SELLING your PROPERTY, we suggest you contact us AT LEAST six months prior to your ALL DUE date to discuss your options of refinancing to a conventional loan (if you and your property qualify) or paying a fee for an extension (if offered at that time by the Lender), or seeking financing elsewhere.

On a purchase, regardless of the appraisal or perceived below market purchase price, your loan to value (LTV) will be determined by the purchase price, or purchase price plus renovation costs. On properties that you have owned over one year, or have been substantially improved since purchase, we will consider a loan based on the appraised value and\or on acquisition cost plus improvement costs.

We have an excellent loan program to roll your renovation costs into your BRAD LOAN. Please refer to the Loan Programs page to learn more about how to include the cost to renovate properties you plan to purchase.

Yes, we will fund loans for real estate purchases in your self-directed IRA or 401(k). Regarding LLC’s and Corporations, we typically we have a borrower close loan and title to the property in their personal name, but allow property to be immediately Deeded over to their LLC after closing in their personal name. Exceptions to this may be considered on a case by case basis when necessary. We will also lend directly to such entities provided they put 40% down.

No, however the loan servicing agent can provide you with a printout of payment history to use in applying for future refinance (a foreclosure proceeding, however would appear on your credit report as it is in the public records).

Available with “cross-collateral”, where borrower allows lender to be secured by equity in additional, usually, free and clear properties.

More than one property can be used as collateral for your hard money loan. For example, if are interested in buying a $100,000 property with no cash down. You own another property that is worth $80,000 that is free and clear. You have $80,000 worth of equity. We could loan you 100% of your purchase price (no money down) because we would use both properties as collateral. You are pledging the equity in your additional collateral as additional security for your loan in lieu of putting up a cash down payment.

No, you would only have to pay off a portion of your loan to release the property you wanted to sell or refinance from the lien. This is sometimes a pre-determined amount at the time your loan is originated, and is called a “release price”.

Loan approval is weighted mostly on the value and borrowers “equity” of the “hard asset” used as collateral with a lesser concern given to the borrower’s credit rating. These loans are also referred to as “private money loans”, as the source of the funds do not come from conventional bank loans but instead come from private sources such as investor’s personal funds, pension plans and other non-traditional sources. These funding sources have more flexibility in their lending practices as they do not have to fulfill the more stringent FDIC and governmental mandated lending requirements of traditional banks.