Questions to Ask a Hard Money Lender
Essential questions to ask hard money lenders about rates, terms, fees, loan-to-value ratios, timelines, and requirements for real estate investment loans.
1What are your interest rates and how do they compare to the market?
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What are your interest rates and how do they compare to the market?
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Why this works
Hard money is expensive—know the cost upfront.
2What fees do you charge—origination, underwriting, processing, closing?
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What fees do you charge—origination, underwriting, processing, closing?
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Why this works
Fees add up quickly and affect your total cost and ROI.
3What loan-to-value (LTV) ratio do you offer, and do you lend on after-repair value (ARV)?
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What loan-to-value (LTV) ratio do you offer, and do you lend on after-repair value (ARV)?
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Why this works
Determines how much you'll need as a down payment.
4What is your typical loan term, and can it be extended if needed?
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What is your typical loan term, and can it be extended if needed?
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Why this works
Most hard money loans are 6-12 months—ensure the timeline works for your project.
5Are there prepayment penalties if I pay off the loan early?
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Are there prepayment penalties if I pay off the loan early?
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Why this works
You want flexibility to refi or sell without penalties eating your profit.
6What types of properties do you lend on—residential, commercial, land, fix-and-flip?
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What types of properties do you lend on—residential, commercial, land, fix-and-flip?
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Why this works
Not all hard money lenders finance all property types.
7What documentation and qualifications do you require from borrowers?
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What documentation and qualifications do you require from borrowers?
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Why this works
Hard money is asset-based, but they still vet borrowers—know what's needed.
8How quickly can you fund a loan from application to closing?
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How quickly can you fund a loan from application to closing?
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Why this works
Speed is a key advantage of hard money—confirm they can meet your timeline.
9Do you require an appraisal, and who pays for it?
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Do you require an appraisal, and who pays for it?
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Why this works
Appraisals cost $300-500+ and take time—factor this in.
10What happens if the project takes longer than expected or I can't pay on time?
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What happens if the project takes longer than expected or I can't pay on time?
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Why this works
Understand default terms, extensions, and worst-case scenarios.
11Do you lend in my target area or state?
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Do you lend in my target area or state?
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Why this works
Some lenders are local only—confirm geographic coverage.
12Can you fund construction or renovation draws, or is it a lump sum?
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Can you fund construction or renovation draws, or is it a lump sum?
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Why this works
Fix-and-flip projects need staged funding tied to milestones.
13What is your loan-to-cost (LTC) ratio for rehab projects?
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What is your loan-to-cost (LTC) ratio for rehab projects?
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Why this works
Determines how much of purchase and renovation costs are covered.
14Do you require personal guarantees or recourse loans?
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Do you require personal guarantees or recourse loans?
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Why this works
Recourse means you're personally liable if the property can't cover the debt.
15What credit score or experience level do you require?
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What credit score or experience level do you require?
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Why this works
Hard money is more lenient than banks, but standards vary by lender.
16Can you provide references from other borrowers?
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Can you provide references from other borrowers?
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Why this works
Past clients reveal how the lender treats borrowers and handles issues.
17What is your approval and underwriting process?
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What is your approval and underwriting process?
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Why this works
Know what documents, inspections, and steps are involved.
18Are there any hidden fees or costs not disclosed upfront?
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Are there any hidden fees or costs not disclosed upfront?
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Why this works
Transparency matters—beware of surprise charges.
19How do you calculate after-repair value for your LTV?
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How do you calculate after-repair value for your LTV?
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Why this works
ARV methodology affects your loan amount—ensure it's realistic.
20What exit strategies do you require or prefer—sale, refinance, or other?
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What exit strategies do you require or prefer—sale, refinance, or other?
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Why this works
Shows whether they're flexible or require specific payoff plans.
Using Hard Money Loans Strategically
Expert tips and techniques for getting the most out of these questions.
Best Practices
Have a Clear Exit Strategy
Know how you'll repay—sale, refi, or cash—before taking a high-cost loan.
Run Conservative Numbers
Factor in all costs and timeline buffers—hard money gets expensive if you're late.
Compare Multiple Lenders
Terms vary widely—shop around for the best rates and fees.
When Hard Money Makes Sense
Good Use Cases
Common Pitfalls
Underestimating Total Costs
Interest plus fees can quickly eat profit margins—calculate all-in costs carefully.
Overleveraging
High LTV loans are risky—ensure you have reserves for overruns and delays.