As a borrower, when you meet with a bank lender, you can expect that they will want to know details about you and the property you plan to purchase, such as your credit score, financial history, global debt picture, and so on, to determine if your loan request fits inside the confines of their requirements. When you meet with a hard money lender, the main question that they are trying to answer is whether you will be responsible and motivated enough to repay the loan. To do so, they will look beyond the traditional lending requirements to get a sense of you and your plans.

There are five common questions that hard money lenders will expect borrowers to be prepared to answer:

1. What amount do you plan to use as your down payment?
   Hard or bridge money lenders will typically expect you to put down more than traditional lenders because they want to know that you have skin in the game alongside them.

2. How much is the asset worth?
   Hard money lenders assess the value of a property differently than bank lenders. They are interested in funding loans for properties that will see a significant increase in value, usually through improvements, rehabilitation, or changes in management. Because of this, hard money lenders will often use the after-improvement value of the property to determine your loan amount rather than the as-is value that traditional lenders use.

3. What’s the story behind your credit history?
   When dealing with private lenders, it’s important to remember that credit decisions are not strongly affected by credit scores, but rather by the story told by your credit history. You should be prepared to discuss your financial past and be open about any problems or issues so that your lender can make their decision based on the context of your score.

4. What’s your exit strategy for the loan?
   Because bridge money loans are structured for the short-term, lenders want to know that you have a plan to pay the loan off before it’s made. For more about exit strategies, click here.

5. When do you need to close on the loan?
   Hard money lenders are able to close loans in a matter of weeks. If your deal is time-sensitive, be sure that your lender is aware of it. You can help speed up the closing time by providing all of the documentation that is needed promptly.

Being prepared with the answers to these questions will help smooth the way for your hard money loan application. If you have a loan request or questions about our hard money loans, you can contact Montegra at (303) 377-4181.