After Closing: What to Expect During the Life of Your RSC Loan

Signing the documents is a milestone, not the finish line. Once a private loan closes, there are a few things that happen right away, a rhythm that runs through the project, and an exit to plan. Here is what to expect.

Funding and the first week

After you sign, the title company or closing attorney disburses the funds. On a purchase, the seller is paid and title transfers to you or your entity. On a refinance, the old lender is paid off. The lender's mortgage or deed of trust is recorded.

Within the first week or so, make sure you have the servicing basics:

• Your loan number
• First payment date and amount
• How to make payments
• Who to contact with questions

Existing RSC borrowers use the Borrower Portal at homebase.rscprivatelending.com.

During the project: payments and draws

RSC's Fix & Flip, New Construction and Bridge loans carry interest-only payments over a 12-month term. On Fix & Flip and New Construction loans, full interest reserves can be built into the loan. An interest reserve sets aside loan funds at closing to cover those payments. Your note spells out whether payments come from your own funds or from a reserve.

On fix and flip and new construction loans, the rehab or build budget is typically held back and paid out in draws once work is finished and checked. Lenders differ on how interest accrues on held-back funds. Some charge interest only on money actually disbursed, so the payment grows as more is drawn. Others charge on the full loan amount from day one. Ask which applies to yours.

Example, round numbers only. On a loan that charges interest only on disbursed funds, you close a $300,000 flip loan: $200,000 funded at closing for the purchase and $100,000 held back for the rehab, at 10%. Your first payment is about $1,667, on $200,000. After a $40,000 draw, it rises to about $2,000. After the full rehab is drawn, it's about $2,500. Budget for the higher number, not the first one.

Keep communication open. If a contractor quits, a permit stalls or the budget shifts, tell your lender right away. Early problems have more solutions.

Near the end: plan the exit

Mark your maturity date the day you close. Then work backward:

• Selling a flip: list early enough to close well before maturity
• Refinancing into a rental loan: start the application once the property is leased, giving underwriting time to finish
• Finishing a build: line up the sale or the long-term loan before the last draw
• Bridge loans: execute the sale or refinance you planned at the start

If you see that you may miss maturity, tell your lender early. Where lenders offer extensions, they are usually not automatic and often carry a fee.

When it's time, request a payoff statement and send it to the title company handling your sale or refinance.

What this means for you

After closing, three things matter: make payments on time, keep draws organized, and plan your exit from day one. Do those and the loan works the way it should.

Questions about life after closing, or ready for the next deal? Ask RSC Private Lending any time. Subject to underwriting.