HML Capital Group

Hard Money...Easy, Fast, Reliable!

Frequently Asked Questions

Lending Criteria

Where do you lend?

We lend in the Greater Baltimore area and the state of Maryland.  We do not lend in D.C. or out-of-state.

 

How is the loan amount decided?

The total loan amount is calculated off the After Repair Value (ARV).  This amount will be used for the property purchase, repairs, closing costs and points.  The ARV is our best guess of the re-sell value of the property, based on the location and your planned improvements.  Our Loan-To-Value (LTV) is typically 60-65%.  Since the ARV is the key to determining the loan amount, it must be reasonable and realistic.

Can I choose my own appraiser?

Keep you money in your pocket.  We don’t use a traditional appraisal.  One of our principals will personally meet you at your property to evaluate the repair work needed, as well as make a valuation of the property (as-is and after-repairs).  This gives us a chance to meet you and get a clearer picture of your plans for the house.

Do you require a survey?

            No.  Keep your money.

 

Do you allow interest payments to be built into the loan?

Sometimes.  This is something that we don’t often do, but if the deal and the borrower are great, we’ll work with you.

Can I get cash back at settlement?

            Sometimes, but this is typically done only in lower LTV situations.

If you can’t approve the loan, can I use another property as additional collateral?

Absolutely.  The second property must, however, be free-and-clear or have a lower LTV (usually 50-60%, after adding our lien).

 


Borrower’s Qualifications

Do I need good credit to get approved for a loan?

No.  We focus on the property and the deal.  We will look at your credit report, but we are much less restrictive than an institution lender (or most national hard money lenders).

Do I have to have rehab experience?

Naturally, we prefer to lend to experienced clients.  However, we do lend to first-timers.  Obviously, the deal has to be solid, the investor must have a clear plan, and there must be adequate cash reserves available.  We can’t be successful if you’re not successful.  We want to be sure that you’re not getting into something that’s beyond your capabilities.

Do I need to put money down?

Usually you will only need to bring points and closing costs to closing.  If your loan to value is low enough, these may be financed.  We do, however, usually require that you have personal cash reserves in the form of readily available cash deposits or a line of credit.  These reserves are necessary for you to get the renovations completed to earn your draws, to fund cost overruns on your repairs, and to make monthly interest payments.  A rule of thumb is that the borrower should have available reserves of approximately 10% of the ARV.

Do I need to have my own cash for the project?
            Yes.  See the answer to the money-down question, above.

Do you pull my credit report, or can you use one that I already have?
            We can use yours to determine if the loan will be approved, but we are doing the loan, we will likely need to pull one directly for our file.

Do you verify all my documents (W-2s, tax returns, bank statements, etc.)?
            No.  We are essentially a no doc lender.  We do, however, often verify your cash reserves.

How many loans can I have open at one time?

This is determined by your previous experience, your performance history, your credit, the deal and your available cash.  Initially, borrowers are allowed to one open loan.  Upon payoff, they will be allowed two open loans.  Decisions beyond that are on a case-by-case basis.

 


Properties We Lend On

Are loans available for rental property?

            Not at this time.

 

Do you require that the property be vacant?

            No, but if you are buying from an owner-occupant, the owner must vacate prior to settlement.

 

Will you refinance a property I currently own?

Yes, as long as it meets our standard criteria.  In fact, we will often reimburse you for the funds used to purchase the property and/or pay off any liens up to our approved LTV.


Can I live in the house during the course of the loan?

            No.  We are a commercial lender and do not lend on owner-occupied properties.

Do you finance properties that are involved in assignments, or flips?  Will you allow assignment fees to be paid out of the loan?

            Yes and yes.

 

Do you require that I have insurance on the property?

Yes.  You must have a Builders Risk policy for a property that will be renovated and we must be shown as an additional insured.  If the property is an occupied rental property, we require a Landlord policy.


What factors during the inspection could cause my loan to be denied?

We schedule on-site inspections only after we have determined that we are very likely to do the loan.  We don’t want to waste your time, or ours, looking at deals that we are unlikely to fund.  However, if the immediate neighborhood and/or the condition of the property is significantly worse than expected, we may reconsider the viability of the project.



Construction Draws


How do the repair draws work?

Prior to settlement on your loan, we must approve your draw schedule.  The draw schedule is a breakdown of the repairs into draw groups, similar to what you would use to determine payments to your contractor(s).  

 

The items that comprise each draw must be specific and clear.  For example, acceptable draw components could be:  rough-in plumbing, hang & finish drywall, prime all walls, ceiling and trim.  Vague items would not be acceptable.  For example:  complete ½ of wall and ceiling repairs, get started on kitchen. 

 

When you’re ready for a draw, you give us a call and we inspect the renovations based on your draw schedule (usually within a day or two).  If the draw is approved, we can usually issue your check on the spot.  Note that you must be current on your interest payments to receive a draw.


 

Can you provide repair money in advance?

No.  You have to use your own resources (or your contractor’s) to get the job to each draw.  At that time, we’ll inspect and release the draw funds.



Other Questions

 

Will HML Capital Group give me a pre-qualification letter?

Yes.  However, we don’t inspect properties that you do not have under contract.  This means that a pre-qualification letter is based more on your experience and your credit than the actual loan evaluation.  Once you have a property under contract, the actual loan evaluation is based more on the property and the deal.  That means we’ll need to see your credit report up front and gather some information about your experiences, if you want a pre-qualification letter.

 

Do you require that we use your title company?

Yes.  King Title in Pikesville.  Their rates are cheaper than most and the quality of their work is unparalleled.

 

Do you do second position loans?              

No.  If your overall LTV falls within our requirements, we can issue a larger loan that pays off your existing liens and provides for construction funding, but we will not issue a second position loan.

 



We want to be your hard money lender …… Easy, Fast, Reliable !

 

 

 

 

 

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