Most private and hard money lending companies do not charge any upfront fees prior to funding a loan, especially for residential properties. However, we have seen some private lenders charging various types of fees prior to funding, and in many cases it shouldn’t be a deterrent. Some fees are reasonable or common for private lending, and every lending company has their own policies on this matter. Upfront fees for commercial real estate are typically different than residential property.
We require all lenders on our platform to indicate which fees they charge, and whether the fees are charge before closing. You can find this information on each lender’s profile.
Below are some of the types of fees we’ve seen lenders charging prior to funding short-term private mortgage loans…
Many private and hard money lenders will not require an appraisal, but some do. If an appraisal is required, the fee is typically paid directly to the appraiser.
Deposits are more common for commercial real estate bridge loans, but we have seen some private lenders requiring a deposit for a residential property loan. Most lenders who do charge a deposit have decided that they are going to fund the loan, but they want a commitment from the borrower. This may be completely reasonable because a private lender may spend a lot of time and effort to complete the process of funding the loan. It would be a huge loss for the lender if the borrower decided to back out of the deal.
Site Visit Fee
For private lenders who only lend in one single market will typically visit every property they fund and meet the borrower as well, without charging any sort of fee for their time and travel. We have seen some private lenders who lend throughout the United States, and they still need to visit the property. This is more common in commercial bridge loans, and sometimes the site visit fee is included in the deposit, if applicable. Most residential property lenders that require an appraisal will not need to do a site visit. We’ve seen site visit fees range from $500 to $3,000.
More info about other types of fees will be added soon.