As a Real Estate Investor or Mortgage Broker, many times you will need to act quickly to buy or assist someone buy or refinance real estate. When time is of the essence, Hard Money financing is the best and fastest alternative. Below are 5 questions to ask when you need to choose a Hard Money Lender:
Q: Does the Lender offer you pre-approval letters and deal coaching?
A buyer presenting a Hard Money Lender provided Pre-Approval to a seller can boost the financing contingency offer to compete with all cash offers. Hard Money Lenders are typically Certified Real Estate Brokers with years of relevant real estate experience. Smart real estate investors leverage their lender’s experience to structure a favorable deal structure. For instance rehabbers typically think that the flip will occur in a few short months. Lenders know that flips can take longer, especially when permitting is involved, and may suggest a longer term for the loan. A longer loan term at the same rates would eliminate loan maturation and extension fee costs.
Q: Does the Lender provide a quote quickly?
A: Best practices is for a lender to render a quote within 24-48 hours. Borrowers should provide critical data for the quote including a loan application, Appraisal if available and deal summary. Borrowers should know the type of loan that they are seeking and understand if the Lender writes those kinds of loans. For example if the borrower is looking for a ground up construction loan and the lender only underwrites rehab loans, the lender would not be able to provide a quick quote.
Q: Does the lender value the property quickly?
A: Hard Money Lenders should generally close a loan transaction in 7-10 business days and sometimes even less than that. One of the first due diligence items is the property valuation. Lenders use their own valuations, Appraisals, Broker Price Opinions, online valuations, MLS and other tools to value properties. The key for the borrower is to make sure that the lender quickly evaluates or performs one or multiple valuations.
Q: Do they live up to their Quote and Term Sheet commitment?
A: Hard Money Brokers work with institutional investors, individual investors, funds and their own capital. Loan terms in Pre-Approval quotes, while nice to receive, many times are adjusted when the final lender is selected. It is important for a borrower to understand when a quote becomes firm and when a quote becomes a commitment.
Q: Does the Hard Money Lender provide competitive terms?
A: Loan to Value, rate, loan term, points, fees, prepayment penalties are all critical elements to a loan. Borrowers should develop a “go to” lender they like to work with and negotiate equitable terms for all parties. The Lender with the cheapest “rate” may not always be the best loan for your scenario. Look at the other factors above before deciding on your lender.
CrowdTrustDeed provides hard money loan programs and creates the highest quality California Trust Deeds in the marketplace. When have you chosen, needed or experienced a successful Hard Money Loan?
