Before Adam and I founded We Fund Houses, I was looking to get some deals funded last year and I ran into a term I hadn’t seen before on some other hard money lender’s sites. That term was “interest reserve”. It sounded harmless, but when I talked to them on the phone and found out what it really was, it was far from harmless.

Interest reserves are a way that lenders force you to borrow more money on your loan as a hold back to pay the monthly payments. It may sound great to think you don’t have to worry about the payments, but in practical terms the reserve does two things that cost YOU the borrower more. One, you have to borrow more money than loans without interest reserves. And if you are borrowing more, guess what, the points and payments are higher! Second, that reserve counts toward the loan amount on the LTV. So not only are your payments going to be higher, but you will be bringing more out of pocket to the closing table to get your deals done too!

Interest reserves are something you won’t find at We Fund Houses. We are interested in building a relationship with our borrowers and becoming their primary funding source for their real estate investments. Not nickel and diming them to death. If you are interested in giving us a try, check out our website at http://www.wefundhouses.com/ there you’ll find a links to get the process started, as well as useful tips for real estate investors in our newsletter and e-courses.

Best,

John Winslow