My newb question of the week

[Christopher0124]

Long story short, as I'm actually doing stuff today.

I was negotiating with an HML when he asked "How many points do you have?" Which I replied with "Huh?"

What points system is he talking about?? I highly doubt my driver's license has anything to do with this.

[MichaelQuarles]

Maybe you never know...

I think he may have been referring to how many points you can pay... HMEL charge interest and also Points which are a percent of money loaned.

So if you borrow 100,000 you're going to have to pay 10k inn points. They typically add the points to the note, therefor if the property values at 100k and they lend at 65% which is 65k then your net proceeds will be 65k minus 6500 minus closing costs...

Hope that helps

Michael

[kiwi1988]

im just taking a stab in the dark here but maybe credit score/points?

[jlspartz]

Personally I would be a little leery about him asking you that.  He should tell you how many points you need.  He's using a negotiation trick - "He who talks first loses".  Points are a fee for the service, meaning the same thing as percentage but you don't get it back.  5 points on 100K is 5K.

[ReCoachDennis]

A straight up HML would know how many points he's charging on a deal.

That's how they make money and which is why there is a quick payback on hm loans because they'll turn around and re loan it and get more points.

Ask around your local REI Club or your mentor to see who they recommend doing business with.

HML are looking at credit much more closely these days due to all the foreclosures they have to do on our fellow investors.

Dennis