Hard Money Loan process

[Tim Matthews]

Hello, I am preparing to purchase my first property to BRRRR. I will be using a hard money loan to purchase and rehab the property. What is the process of acquiring a hard money loan? Do I need to already have a property under contract before I approach a hard money lender? Should I get prequalified from a lender to see how much I can be approved for, then go shopping for properties using that preapproval amount?

[Michael Glist]

I would recommend talking to a HML first as they will be able to give you an idea of your purchasing power. They will also be able to provide you a pre-approval letter and/or a proof of funds letter for when you submit your offer. Not all sellers will ask for a pre-approval letter or proof of funds letter but if they do it is better to be prepared.

As mentioned when talking to a HML without an exact property, the terms they provide will be more general as they cannot provide exact terms without having an actual property and actual numbers on the purchase and rehab to give you an exact estimate.

Typically when talking to a HML upfront they will want to know about your experience, credit and cash available. These will all paly a part in your approval, amount you can qualify for and your rates and terms.

I hope this helps.