Fix & Flip Hard Money lender credit check, tax returns, app fee?

[Jiva Segaran]

So I have an investor client who is using a hard money lender offering 7% and 2 points (the "broker" is adding 2 points and a $1000 application fee). They run credit, require 2 year tax returns, pay stubs, 10% down and basically are acting like a bank. The hard money lender will loan 75% of the ARV towards repair costs and purchase.

My question is although the 7% is a game changer for BRRRR , is it normal to charge an application fee and do all the personal background due diligence on the investor?

I met the "broker" and he seems knowledgeable and legit but Im just concerned for my client who is a "flipper newbie".