Hard money lenders are, as the name implies, lenders that base loans on property, collateral or assets. In many instances, they are private lenders who can vary in their lending requirements and processes. Because of this, you will want to take the time to get to know them and what areas of lending they may specialize in. Here, then, are the top seven questions you should ask during your initial interview process. Choosing well is important not only to your current project, but to your future projects that are sure to follow.
What type of lending experience do you possess and what type of businesses or real estate segments do you specialize in? Some hard money lenders specialize in particular types of small businesses while others invest in various real estate properties. Of course, if you have stellar numbers that show increasing profitability and a well-thought out exit strategy, you may have multiple interested lenders. For your sake, obtaining a loan from someone familiar with your project type is highly recommended. Your success is, after all, their success. Leveraging your lender’s experience can help you succeed and give you the additional benefit of professional advice when needed. This leads us to the next question: Are you open to providing information and consultations if I have questions as the project proceeds?
You will also want to find out if they are direct hard money lenders or brokers that will obtain a hard money lender for you. Brokers that work with multiple lenders can often find the best deal for your specific needs which includes the fastest time to funding as well as the best rates. Just what is their interest rate, and do they charge points or processing fees? While these determine the cost of the loan, it should not be the only consideration. Time to funding as well as their experience level can be even more important points to keep in mind when choosing a lender.
Is there a prepayment penalty?
This is one of the most important questions to ask. Why? Because loans that are quick to fund and high risk can carry higher than average interest rates. If you are involved in a quick fix and flip property, you will want to get out as soon as the rehab is complete and a seller is found. And you’ll want to keep those extra profits that accompany a job well done instead of passing it on to your lender.
Make sure your lender does not charge a prepayment penalty.
At Level 4 Funding, we are brokers that specialize in finding the right lender for your particular project.
We do not charge prepayment penalties and offer fast and easy approval processes that can fund within days instead of weeks. Call us for a no-obligation quote.
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.