Term Sheets: A Lender's First Offer on Your Deal

A term sheet is a brief summary of the loan a lender is prepared to offer, based on what it knows so far. It comes before full underwriting. Most are non-binding.

What you will usually see

• Loan amount and leverage, as loan to value (LTV) or loan to cost (LTC)
• Interest rate and whether payments are interest only
• Points and lender fees
• Term and any extension options
• Prepayment terms
• Reserves or holdbacks
• Guarantee requirements
• Key conditions, such as appraisal, title and insurance

A simple example

Example, round numbers. Two lenders quote a $400,000 flip loan. Lender A: 10% rate, 2 points. Lender B: 9.5% rate, 3 points. Over a 6-month hold, A costs about $20,000 in interest plus $8,000 in points, or $28,000. B costs about $19,000 plus $12,000, or $31,000. The lower rate is the more expensive loan for this timeline.

What it is not

A term sheet is not an approval or a rate lock. Appraisal, title, documents and other findings can change the final terms.

Why it matters to you

The term sheet is where you check whether the deal still works with real financing. Compare total cost, not headline rate, and flag any condition you can't meet before you pay for reports.

RSC Private Lending issues term sheets in 24 hours and can close in as few as 10 days. Final pricing depends on experience, credit, leverage and location. An appraisal or due-diligence fee may be due upfront, and most other costs are paid at closing. Send us your scenario. Subject to underwriting and credit approval.