What Questions Should I Ask a Hard Money Lender?
Are you considering a hard money loan? If so, it’s important that you work with the right lender to not only receive favorable terms but also to ensure a smooth loan process. Understanding why you may want to work with a hard money lender, what to look for, and what questions to ask are essential to consider before submitting your loan application.
Why Work with a Hard Money Lender?
Working with a hard money lender is often the preferential choice for many investors compared to a traditional financial institution. This is because hard money lenders can process loans quicker, which is important with time-sensitive real estate transactions.
In addition, hard money lenders focus more on the equity in your property than your credit history. This means that investors that would be precluded from financing based on their credit score now have a better chance of purchasing a property.
There are two types of hard money lenders that you can receive financing from: direct lenders and brokers. Direct lenders use their own money to fund the loan, while brokers serve as the middleman between the borrower and private lenders.
Since more parties are involved when using a broker, a direct lender generally comes with lower fees and quicker transaction times. Nevertheless, almost all hard money loans will have a short-term maturity date, usually 12-18 months.
What Should You Look for in a Hard Money Lender?
Many hard money lenders have similar operations, but there are some key differences that you want to watch out for. First, you want to be sure that the hard money lender you work with has extensive experience. Ask potential hard money lenders about their past projects, the success rate, and how long they have been in business.
A good hard money lender will also have an excellent reputation. You can inquire about the company’s reputation by checking out the Better Business Bureau or asking local Real Estate Investor Associations that have worked with the company in the past. Oftentimes, good companies are eager to talk about past projects and share their qualifications. If your prospective lender hesitates when asked these questions, it may be a red flag.
Loans are made or arranged by Wilshire Quinn Income Fund, LLC (the “Fund”) pursuant to California Finance Lenders Law license #603J060. The information contained in this message is for informational purposes only and is meant to provide general background information on the Fund and its manager, Wilshire Quinn Capital, Inc. (the “Manager”). Any and all information herein is deemed reliable but is not guaranteed.
Questions to Ask a Hard Money Lender
Below a list of 15 questions to start the discussion between you and a potential hard money lender:
- Do you have a real estate license or lender’s license? If so, what is the number?
- How are disbursements handled?
- What is the maximum loan size available?
- Are there any net worth or liquidity requirements?
- What is the minimum and maximum loan term?
- Do you have a downpayment requirement? If so, how much?
- What is the average interest rate loans are assessed?
- How is the value of my property determined? Is there an appraisal?
- How much are loan origination fees?
- What is the average cost of third-party reports, like appraisals, structure reports, and environmental reports?
- What is the fee for applying for a loan?
- Is the loan considered recourse or non-recourse?
- Do you have any prepayment penalties?
- How long would it take to fund my loan?
- What are the penalties for past due loans?
These are just some of the questions you should ask a hard money lender. After all, it’s important for you to interview a lender before deciding to proceed. At Wilshire Quinn Capital, we can confidently answer all these questions and more. Feel free to contact one of our loan representatives today at 619-872-6000 or firstname.lastname@example.org to go over your loan scenario.
- Funding typically in 5-7 business days
Loan Amounts from $200,000 to $20,000,000
Interest Rates from 7.5% to 11%
Loan Term: 3 – 24 months
Commercial & Residential (non-owner occupied) Real Estate
- Purchase, Refinance, Cash-out Refinance, Rehab, Blanket Loans
Foreign National Loans Available
About Wilshire Quinn
Wilshire Quinn is a San Diego hard money lender focused on short term bridge loans, secured by first trust deeds. The company is based in San Diego, CA with offices in Los Angeles and San Francisco. Wilshire Quinn typically funds loans for their customers in 5-7 days. Their successful track record is closely linked to their ability to make immediate lending decisions based on their highly disciplined underwriting approach. The company funds a variety of loans such as: refinance, purchase, blanket, rehab loans, 1031 exchange, partnership buyouts, and more. They originate hard money loans ranging from $200,000 – $20,000,000. Wilshire Quinn works with commercial and residential buyers nationwide.
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