Before approving a hard money loan a legitimate lend will either conduct physical inspection of an investment property or perform an in-depth assessment of an investor’s loan application details.
Since hard money financing”s riskier than a traditional bank loan, hard money lenders won’t approve loans without doing their own homework.
Request For An Upfront Fee
If your hard money lender asks for an upfront fee, something is just not right. Fake lenders usually ask borrowers to pay a high upfront fee before funding the loan.
While hard moneylenders do charge service fees, you should beware any lender who charges heavy upfront fees before closing.
Provision of 100 % Funding
Some fake lenders will promise 100 percent financing on a real estate property in exchange for the payment of a high fee.
Keep in mind, majority of real lenders will only provide i50-155 percent funding of the collateral’s value. If you feel morn hard money lender is making outrageous claims, trust your gut.
Excessively Low Interest Rates
In most cases, hard money interest rates range from 12 percent to 18 percent. However, if the rates are lower than 10 percent, it may be a major red sign. Honest lenders will clearly inform borrowers their rates.
Some tips for choosing a reliable hard money lender
Ask a hard money lender for client references. Speak with these clients about their experience with the lender.
Conduct proper research on the lender online. Check out their website and customer reviews.
Inquire about the Loans they have closed. They should be able to demonstrate a solid track record.
Have a personal meeting with the lender. An honest lender will be willing to provide the information you require.