Q: Do I need a good credit score to apply for a hard money loan?
A: Generally speaking a good credit score is not required to obtain a hard money or private money loan. This is due to the nature of the loan. Hard money loans are usually based solely on the LTV (loan to value) of the property in review. However having a good credit score may aid in legitimizing the borrower.

Q: How long does a hard money loan take to close?
A: Anywhere from a few hours to a few weeks, and is dependent on the particulars of the loan. Properties with lower LTV will usually close faster because there is less risk to the lender. Loans with a higher interest rate will also close faster.

Q: Why is there an application fee.
A: Often times the lender will want to fly out to visit the property and borrower. This fee covers the travel expenditures. However, the application fee’s primary purpose is to demonstrate that the borrower is serious about acquiring a loan.

Q: Can the interest and upfront points be rolled into the loan?
A: Yes. If there is enough value in the property this is generally an option.

Q: Am I able to file for an extension on the loan?
A: Yes. Upon the deadline date of the original loan a six month extension may be requested. This will generally cost a few points.

Q: Is a executive summary required to apply for a hard money loan?
A: No. But they will help the loan close faster as it provides the lender with more information that aids in the due diligence process.

Q: What happens if I default on the loan?
A: Within 2-3 months after no payment is received the lender will unfortunately have to start the foreclosure process. However if the borrower has two to three solid exit strategies in place this generally doesn’t happen.

Q: What is the difference between a hard money loan and a private money loan?
A: Usually these terms can be used interchangeably. One difference may be that a private money lender’s capital is a pool of investor monies, whereas hard money lender’s capital is the asset of the corporation.