Frequently Asked Questions
What is a hard money loan?
A hard money loan is an asset-based loan through which a borrower receives funds secured by real property.
Why ResCap?
ResCap understands your business because our partners have flipped over 1,000 properties and are still in the business themselves. We fund loans up to 100% of 70% of ARV and will approve your loan in an expedient manner. We have rehab and lending experts on the ground in the markets we serve.
Do I need a property before I apply or can I be pre-approved before I find a property?
You can apply to be pre-approved based on your credit and financial statement with or without a property under contract.
How much experience do I need to have to qualify for a ResCap loan?
ResCap understands that we all have to start someplace so we will consider people with little or no experience. In these cases, we will typically be looking for a little higher credit score and some more liquid capital to qualify. We will also want to know you are working with an experienced contractor. New investors will be limited to one deal at a time with low to moderate repairs.
Will I receive a Proof of Funds letter?
We will supply a Proof of Funds Letter once you have been pre-qualified by ResCap. There is NO COST to get pre-qualified.
Do I order the appraisal or does ResCap?
Do I order the appraisal or does ResCap?
How long does it take to approve and close a loan?
The approval of a loan usually takes about 2 business days. Once approved, all we need is a valid appraisal, clear title and evidence of insurance to close the loan. On average, a loan that is submitted can fund within 14 days.
What is interest rate and fees you’ll charge me?
The interest rate is 10%. ResCap charges a $700 appraisal and processing fee, a $1,000 document preparation fee and an origination fee of 3 points. The origination fee, otherwise known as points, can be rolled into the loan.
What are points?
A point refers to the origination fee charged by a lender in a real estate transaction with 1 point equaling 1% of the amount of the loan.
Will you charge me interest on the full note amount or the funded note amount?
We charge interest on the funded note amount. Unlike some other lenders, we will not charge interest on repair funds until they are drawn.
How much will you loan me on my property?
100% of purchase and repair costs up to 70% of After Repaired Value (ARV) for experienced investors or 65% of ARV for newer investors. We will consider properties over 70% (65% for newer investors), but you will need to make up the difference at origination.
What is After Repaired Value (ARV)?
After Repaired Value is the fair market value of the house after you have made the repairs to the home contemplated by your fix-and-flip business plan.
How does ResCap determine my loan amount?
We confirm the ARV against the appraisal and use either 70% or 65% of the appraised value, depending on borrowers experience.
What is the minimum and maximum I can borrow?
ResCap makes loans between $75,000 and $1,500,000.
How does ResCap offer pre-approval to Borrowers?
We check your credit, financial strength and industry experience and provide you with a Proof of Funds letter.
What is the term of a ResCap loan?
9 months.
How do I get a ResCap loan if I have a property under contract?
Simply go to our website and apply on-line.
What types of residences qualify for a ResCap loan?
Single family homes, duplexes, triplexes and quadplexes.
Do you require appraisals?
Yes, prior to funding your fix-and-flip loan, we will send an appraiser to the property to verify the condition of the home and confirm its ARV. We also send inspectors to the property with each repair draw to confirm that the repairs have been completed in a workmanlike manner.
Do I need to purchase property insurance for this loan?
Yes. We require an insurance policy on each property for which we have an outstanding loan.
How quickly will I receive funds once my loan has been approved?
Provided you have clear title, a completed appraisal and insurance on the property, we can wire funds to you within 24 to 48 hours.
How does ResCap submit funds to me?
We wire closing proceeds directly to the title company or attorney. We wire repair draw reimbursement to the borrower’s bank account.
What is required before I request a draw payment?
After completing the work, submit your draw request and ResCap will send an inspector to the property to verify that the work has been done in a workman like manner.
Will ResCap run my credit?
Yes, but it is a “soft pull” that will not affect your credit score.
Do credit issues prevent a borrower from qualifying for a loan?
Credit issues alone will not prevent a borrower from qualifying for a loan; however, the liquidity and experience of the borrower will need to be even stronger if there are credit issues to consider with the loan request.
Do you need me to have an LLC set up before funding my loan?
ResCap will only make a loan to an LLC or other special purpose business entity (i.e.: partnership). If you do not have an established entity set up, you will need to set one up prior to us funding your loan.
Do I have to close my loan at a title company / attorney’s office?
Yes. ResCap requires the loan closing to be completed at a title company or attorney’s office.
What monies do I need to bring to closing?
At closing, the borrower needs to bring money required to pay for title insurance, property insurance and any other closing costs above either 70% or 65% of ARV depending on experience.
Do I have to submit tax information and financial documents to be approved for my loan?
Yes. ResCap requires the borrower to submit the prior year’s tax return, the most recent pay stub and the most recent bank statements of the borrower (personal and business).
Are you in my local market?
ResCap has lending affiliates in North Carolina, South Carolina, Connecticut, Massachusetts, New Jersey, New York, Pennsylvania, Florida, Georgia, Tennessee, Ohio and Texas.
Does ResCap offer construction financing on single-family housing?
ResCap does not do construction loans at this time.
Does ResCap approve and fund heavy rehab loans?
ResCap will consider heavy rehab loans; however, the borrower will have to prove successful prior experience with a heavy rehab loan.
Does ResCap loan money on vacant land?
No. Under no circumstances will ResCap consider a land loan.
Does ResCap loan money to Borrowers on their primary residence?
No. Under no circumstances will ResCap loan money to a borrower on their primary residence.
Is this considered asset-based lending?
Yes. A hard money loan is an asset-based loan through which a borrower receives funds secured by real property.
Can I get more than one loan at a time?
Yes. To obtain more than one loan at a time, the borrower must have the financial strength and industry experience to be proven worthy of managing more than one fix-and-flip project at a time.
Can I extend the loan if I need it longer than the original term?
ResCap will consider a 90-day extension for performing loans that need additional time to complete the repairs prior to sale. An extension fee of 1 point will be charged.
Will you loan less than $75,000?
Under special circumstances, ResCap will loan less than $75,000.
Will you loan on projects where the purchase price and repair costs combined exceed 70% ARV?
We will loan on projects with combined purchase and repair costs up to 75% of the after-repair value. Experienced investors will have to bring additional funds to the table where purchase and repair costs are over 70% of AVR or over 65% ARV for new investors.
Do you ever loan more than 75% of ARV?
No.
Are there penalties if I pre-pay my loan early?
No. There are no pre-payment penalties on a loan that is paid in full prior to the expiration of the term of the loan.
Do all investors qualify for 100% financing?
As long as a borrower meets our basic criteria we will offer them “No Money Down” financing. Experienced investors, those that have completed 10 or more rehab projects or have successfully closed out 5 Residential Capital Partners loans, qualify for 100% funding up to 70% of the after-repair value. Borrowers having completed fewer rehabs qualify for 100% funding up to 65% of the after-repair value.