Now that you’ve made your listing on Scout, you’ve been contacted by many lenders who think they can fund your project. How do you know which lender is right for you? Here are some questions that can guide you to your best option. 

Do you lend for owner-occupied properties? 

If you’re hoping to use a hard money loan to buy your own primary residence, this will be the first question you need to ask. Most hard money lenders won’t, but a few will.

How is the loan repaid? 

Are you expected to make interest-only payments during the term? No payments? Will the full balance be due at the end of one balloon payment? Knowing how the loan will be repaid — and being able to meet those payments depending on your investment property — is the most important factor of all.

 What are the fees on the loan? 

Not all lenders publicly advertise all of the fees. Some, for instance, will charge you an escrow fee for your loan, while others will assume that fee themselves. Make sure to get a full list from each lender you’re considering.

 What is your real estate broker license ID? 

Hard money lenders must be licensed by the State to give out these loans. Look them up through your State’s real estate bureau to ensure they’re properly licensed before you offer them a loan; this will also give you peace of mind that the firm practices safe and standard lending practices.  

 Are you a loan broker or the lender?

Just like insurance, it’s common for loan brokers to inform lenders with a number of deals in exchange for a fee, and that fee may come out of your pocket. Be sure that the individual contacting you through Scout is not a broker and is an accredited lender.