How to Read a Loan Term Sheet Like a Pro
A term sheet can make or break your deal, it outlines the cost of your financing so you can make sure you understand your true costs and profit.
Its important to understand Term Sheets, not just so you know what you’re paying for but also so you can pick up on the sales tricks lenders you to get you to choose them over their competition.
✅ **Loan Amount:**
Is it enough for purchase + rehab? Know your total funding needs.
Is your down payment what you expect?
Make sure you double check to ensure nothing was miscommunicated.
✅ **Interest Rate:**
Lower is better (obviously), but interest rate isnt everything.
Watch for hidden junk fees that offset a good rate.
Or do they have minimum interest requirements (required to pay at least 90 days)?
If so you can probably do better.
✅ **Points:**
1 point equals 1% of the total loan size.
1–3 points up front is common rate. If they’re offering less, they probably have surprise junk fees.
If they’re asking for more, you can probably do better.
Compare total cost, not just rate.
✅ **Fees:**
Check for appraisal, processing, doc prep.
There will always be costs since the Lender incurs costs to get the loan created for you, just make sure they make sense and arent excessive.
✅ **Term & Extension:**
How long is the loan?
What happens if you need more time?
Do they have minimum interest requirements?
Be realistica and makre sure you’ll have enough time to get the project completed AND sold.
✅ **Prepayment Penalty:**
Can you pay off early? Some loans charge extra if you do.
For Hard Money this should always be a big no no. For DSCR, its common so don’t get too worried.
👉 **Pro Tip:**
Don’t just chase the lowest rate.
Look at total cost, timeline, and flexibility.
If youre unsure what a lender is charging you, send the sheet to SLA Capital.
We are happy to give a clear break down so there are no surprises.
Stop agreeing to loans with unclear terms and excessive junk fees.
📲 Apply at slacapital.com
🛡️ Your quest for funding ends here.
