You need to qualify hard money lenders before you commit
As with most things in life, it’s knowing what questions to ask. Be safe, not sorry. When you meet someone you are thinking of doing business with here are the questions to ask. This will make you sound like a pro.
1. What is the loan to value you will lend? Is it based on future repaired value or my price? Do you subtract repair costs from this?
2. What is the interest rate?
3. How long is the period of the loan?
4. How many points do you charge?
5. What other costs are there? What about an appraisal?
6. Are these costs paid up-front (subtracted from the money you get at closing)? Or added to the loan balance?
7. Do you escrow for repairs? How is the money dispersed? Do you require me to have any of that money in the deal? If so, who holds that money?
8. Do you fund ugly houses, ones in bad areas?
9. Do I have to have vacant insurance? (VERY EXPENSIVE!)
10 Will you loan to a trust if I am willing to guarantee it personally?
11. How long does it take to fund?
12. What kind of checking do you do about me? Do I have to fill out a 1003 (Fanny Mae application form). This requires all kinds of what I consider very personal info and none of their business. A credit report and a simple one pager should suffice.
13. Will you give me a pre-qualify letter that I can submit with my offers?
