Hard Money Loan process

4 Replies

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?

You can request a pre-approval from a hard money lender. Usually you need that to submit an offer. You can approach talk to a lender before you search for your ideal property. But the terms will be very general. Once you have the property under contract, the lender will ask more information about you, about the property and to give you more precise quote. Then you move forward to submit more documents and close.

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.