Certain fees are to be expected when you borrow money. But there can be hidden fees that you will not learn about until the closing unless you are very thorough in reviewing your hard money loans Arizona documentation.
There is always a cost associated with borrowing money. And legitimate lenders will clearly explain the cost prior to the closing date. They don’t want to invest the time and effort in drawing up the documents only to have the borrower refuse to sign on closing day. But the less than reputable lenders will bury these fees deep in the documentation in hopes that the borrower never discovers them until after signing the loan documents.
Points are not considered a junk fee but are more the cost of creating the documents for hard money loans Arizona. But there are other fees such as document preparation fees, underwriting fees and clerical fees which do fall into the junk fee category. The best way to avoid paying any of these fees to to request a written list of all of the fees associated with the hard money loan. In addition verify which fees will be due at the closing. This will let you know exactly how much you will need to pay in addition to the down payment on the property.
Upfront Fee Scams
In addition to hidden fees that can get added into the loan documentation, there is a scam that includes upfront fees. In this situation, the lender explains that they require an application fee or they sometimes refer to it as an administrative fee to process your application. In essence, they are requiring you to pay them before they decide if they will fund your loan or not. In some cases they say that the fee will be applied to your points once the loan application is approved. But this is all a scam. They are not going to approve your loan application. They never approve any applications. This is just a way to collect fees from unsuspecting borrowers. When you try to call or email the lender, you never get a response and your application fee is long gone. You should never be asked to pay fees before you can apply for hard money loans Arizona.
Get a Second Opinion
No legitimate hard money lender would ever be offended if you ask for a copy of the loan documents so that you can have them reviewed by your accountant and lawyer. Hard money loans Arizona are not as tightly regulated as traditional loans so the legal documents can be very confusing to the average borrower. So it is a very wise choice to ask for a full list of all of the loan fees and a copy of the loan documents to have reviewed by a professional. A hard money loan is a serious investment and you should take every precaution to protect your financial interests. A lending professional will not be offended and will often be impressed with your candor for explaining what you are doing and why.
Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Office: (623) 582-4444
dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
