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17 Questions to Ask Prospective Hard Money Lenders

So you have decided that a hard money loan is the right choice to further your project, but what should you be looking for when choosing a lender? These key questions should definitely point you in the right direction.

  1. Are they the actual lender or are they just a broker for another lender?
  2. Do they check your personal credit? If so, is there a minimum score needed?
  3. What project details and documentation do they need to make a quote? How long will it take to get a quote?
  4. How many fix and flip loans have they funded in the past 12 months?
  5. Where does their money come from? Is the money they lend in their possession and in their control, or do they have to go raise it from a third party?
  6. How long does it take them to close a deal?
  7. What happens to your loan after funding? Do they sell it or keep it in-house?
  8. Who does the loan servicing? The lender or a third-party servicer?
  9. Do they rely on 3rd party appraisals, or underwrite loans in-house?
  10. What kind of loan documentation is involved? And who prepares those loan documents?
  11. What happens with your loan if the project takes longer than expected? Can the loan be extended?
  12. How do you pay interest? All up front, monthly pre-paid, monthly in arrears, all at the end?
  13. If the lender provides you a quote, is that quote 100% firm on its terms?
  14. Have they ever quoted a loan, and then changed the quoted terms prior to closing?
  15. Does the lender only lend? Or do they also flip houses themselves? (If they also flip houses, are you comfortable with that as a borrower given that your lender competes with you)?
  16. Have they ever foreclosed on a loan? If so, why?
  17. Have the lender provide you references to a few of their other borrowers so you can call and ask them questions.

For a more detailed overview of How to Choose the Right Hard Money Lender read our guide on the 4 C’s of private financing.

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