Hard Money Loans Process Overview

[Jeffrey Hayes]

Hi,  I'm flipping homes now and was just wondering if anyone who has any experience with hard money loans could give me a brief overview of the process as far as whether or not you need to get pre-qualified with a hard money lender before you find your flip.  Does it take a long time to get pre-qualified if you need to before you can get pre-qualified?

I'm shopping for some hard money lenders right now and I know that some don't even do a credit check.  Are you supposed to have a detailed sheet of comps/repair costs to show the lender before you apply for the hard money loan?  I just wondering about the funding process for hard money loans as well.  Any info would be appreciated.  Thanks,  Jeff

[Derek Walvoord]

This is in response to the above comments, which were very good.

At our shop, we look at credit.  You either have cash, good credit, and/or experience, and we want to know about all of them.  These are the factors that are weighed when a company thinks about lending you money.

That being said, I can assure you that your HML does not want to take your property back from you. It is a real hassle to foreclose on anybody. I have heard people talk about it, but we really don't want to do it. We are careful about who we lend to, because our business is to lend money, not fix houses. (I, of course, like to fix houses too, but on my own time :) ).

Before I worked at a HML, I used them to do flips. I am a fairly cautious person, so I really wanted to get pre-approved before I went out and made offers. I know most HML's say, "bring us the deal, then we can make a decision", and I get that. But, I want to be able to feel secure that when I make an offer, I really can close it. So, at the very least, I like to have a conversation with the loan officer about what they are looking for.

One other quick thing.  We have had Fannie get really upset when people make cash offers, and then come in with our financing.  It has spiked some deals in Chicago at least.