How to choose the Best
Hard Money Lender
5 Steps to not getting ripped off
Loan Questions Guide
How to find a good Hard Money Lender
So you have decided it is time to find a Hard Money Loan and to work with a professional hard
money consultant to finance your Home, Investment property or commercial project. Whether you
are looking for a commercial or residential loan there are many things to consider when making
this important decision.
Steps to finding a good hard
1.) Check to make sure that they are properly
2.) Get two or more references.
3.) Ask how long they have been in business.
4.) Get at least one other quote for the loan to
make sure they are not over paying for
interest rate, points, or fees
5.) Find a lender that will give you pricing over
6.) Get a good faith estimate or letter of intent so
you know the total you will pay before you go
The best place to start asking about hard money lenders is other real estate investors, real estate
professionals, and even a real estate attorney. Other good sources of referrals include
contractors, accountants and your local real estate club. The Internet will have many companies
to choose from, and using this guide will help you sort through your options. When asking for
referrals, be sure to check the type of financing the hard money lender was provided. Also,
determine if the lender specializes in residential or commercial loans.
Some good questions to ask:
Were you happy with the service provided by the hard money lender?
Everybody has their own ideas of service, so you should ask very specific questions like, how fast
did they return your calls, where they totally upfront about all costs, and when you went to closing
did you have any big surprises?
Was company representative courteous and polite?
This is a very important consideration. The entire experience, from beginning to end, needs to be
as stress free as possible. Plus if the lender enjoys their job, the quality and attention to details
will be better. The customers attitude can and will affect the entire loan process. Hopefully this will
be the first question you ask. If the answer to this question is “no” then do not go any further, you
don’t want to work with that company.
I s there a pre-payment penalty included?
If a pre payment penalty was included find out how long and how much it is before you can payoff
with no penalty. If it has a pre- pay penalty ask what it takes for no prepay? Most lenders have
no prepay loan programs available. Get it in writing and understand its limitations! A good lender
is happy offer you a loan program that meets your needs as well as theirs. Good lenders can be
flexible if you have compensating factors like, good property value, low loan to value, good
payment history and additional collateral. Remember most of the lending decision is based on the
Equity in the property! The more equity you have the better terms you should seek.
How to Hire a Hard money lender!
Think about the last time you purchased a car. Chances are you didn’t go to the yellow pages,
choose a dealership at random, and buy your car from the first lot you visited. Many times,
though, this scenario describes the way homeowners and investors find a lender -- they look in
the phone book and call the Lender with the largest ad or the first one listed. But much like
purchasing a car, finding a quality hard money lender requires research and comparison
Ask Specific Questions
HOW LONG WILL IT TAKE TO CLOSE?
Loan closings should take no more than 2 weeks if property is free of legal encumbrances.
WHAT KIND OF INCOME VERIFICATION WILL THEY NEED?
The most common is W2’s and pay stubs for owner occupied, and stated income for non owner
WHAT ARE YOUR CLOSING COSTS OPTIONS?
Lenders have pre pay and no pre pay loan options. Usually the rate is a little higher for no prepay.
Lenders charge points and this also can affect the rate. Make sure you get all the closing costs
upfront so you can compare with your second or third lender. Make sure the lender can explain
the benefits of the points they are charging you.
ARE THE RATES and FEES NEGOTIABLE?
This is the lenders SECRET. The rates and fees are negotiable, to a point. If you shop and get
several offers you are in a much better position to negotiate then if you do not shop.
ARE THEIR ANY UP FRONT FEES?
There should not be any upfront fees for most residential loan approvals. The only fee’s a
borrower will pay upfront is when the LOI is signed and the lender orders appraisal.
Execute a Letter of Intent.
Once you have agreed to the general terms with a hard money lender they should then send you
a Letter of Intent. The letter of Intent will usually be 4-6 page documents, which lays out all terms
for the loan. This is the equivalent to a Good Faith Estimate used on owner occupied loans.
If you see terms different from what you agreed to, you should contact lender and have corrected
or move on to the next lender.
Things to Look For in a Lender
There are a number of qualifications that can set a hard money lender apart.
• Better Business Bureau -- Contact your local Better Business Bureau to ascertain if any
Complaints have been filed against your potential lender.
• Insurance -- Be sure that the prospective lender you are considering is fully insured, having
• Licensing- Lenders are licensed by the state, but some small lenders may work from home and
only fund a few loans each year and may not be licensed.
• Use Google local places www.Google.com to see what others have to say about this
company. If a lender has good reviews on Google Places then it is a good bet they will do good
job for you too.
* Small hard money lenders can be much more affordable because their overhead is lower.
* If it's a big loan request ask a number of lenders for LOI’s and discard the expensive option and
choose one of the other options.
For More Information or to speak to a Hard Money Consultant visit
www.RehabLoansSanDiego.com or call 1 866-611-0186
Hard Money Consultant
Private Lending Groups
1756 Essex St #204
San Diego CA 92103