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.