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Vent: I called private money loans a scam for 2 years, then a guy in Phoenix closed my $85k deal in 9 days
So for like 2 years I told everyone that hard money lenders were all crooks with 14% rates and 5 points just to steal your equity. Then my flip in Phoenix stalled because the bank appraiser kept pushing the closing date back, 3 times in 5 weeks, and I was bleeding $2,100 a month in holding costs. My realtor finally said just call this guy, and he closed my $85k loan in 9 days with 11% and 2 points, no tax returns, no W2s, just the property and my credit score. I know the rates are high but if I had waited for the bank I would have lost the deal and probably $12k in fees. Anyone here actually run the math on how much a slow bank closing costs you versus paying points upfront?
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williams.kim10d ago
My brother in law waited 61 days on a bank refi last spring and the rate lock expired twice, cost him almost $9k in extra fees and he never even got the money. That $2,100 a month you were bleeding is the part people always skip when they do the math, because holding costs don't care about your rate, they just keep stacking up while the appraiser sits on his hands. I've watched the same thing at the dentist, at the mechanic, anywhere there's a line, the cheap option is only cheap if you can afford to wait. You paid maybe $3,400 more upfront between points and rate, but you saved $12k and actually got the house. The folks calling hard money a scam have never had a deal dying on the vine.
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