Today we are going to share the 9 questions to ask before you commit to a hard money loan.Yes, cost matters. However, cost is not the only thing that matters. Before you commit to a hard money loan, you need to look at the full picture. Funding is half of real estate investing. After all, you need money to make money. So let’s walk through nine smart questions to ask before you sign anything.

1. Can They Actually Close and Fund On Time?

First and most important, can they close? Are you talking to a broker? Or are you talking to a direct lender? Either way, you must make sure the money is real and ready.

Because here’s the truth, if you get a property under contract and your lender fails to fund, you damage your reputation.

For example, imagine you lock up a deal from a wholesaler. Then closing day comes. Your lender delays two weeks. That wholesaler will likely stop sending you deals.

Therefore, verify funding.

• Ask for referrals

• Ask who controls the money

• Ask how long they typically take to close

In this business, speed matters. So make sure they can perform.

2. Will They Fund the Full Amount You Need?

Next, will they fund enough to make the deal work?

You need to cover:

• Purchase price

• Rehab budget

• Closing costs

• Possibly payments

If the lender only funds part of it, do you have the rest?

For example, let’s say the lender funds 85% of purchase and 80% of rehab. However, you don’t have the extra cash. Now you’re short. As a result, your project slows down. And when projects slow down, costs rise.

So instead, make sure the deal is funded from start to finish. From close to close.

3. Does the Pricing Match Your Timeline?

Every deal has a timeline. Some flips take 2 months. Others take 9 to 12 months. Therefore, pricing must match your plan.

Sometimes it makes sense to pay more points and get a lower interest rate. Other times, it makes sense to pay fewer points and accept a slightly higher rate.

For example:

• Lender A: 3 points, 12-month term

• Lender B: 1.5 points, 6-month term

At first glance, Lender B looks cheaper. However, if your project runs 8 months, you may pay another 1.5 points. Now it costs more. So always match the loan to the project.

4. What Is the Real Interest Rate?

Now let’s talk about interest.

Ask these questions:

• What is the note rate?

• Is there a minimum interest period (3–6 months)?

• Do they charge interest on unused rehab funds?

• What is the default rate?

Because here’s the problem. Some loans require you to keep the loan for 3 months minimum. Even if you sell in 30 days, you still pay 3 months of interest. Also, default rates can jump high fast. So before you sign, understand every detail about the interest. Clarity now prevents stress later.

5. How Many Points Are They Charging?

Points are simply a percentage of the loan.

For example:

If your loan is $200,000
And they charge 2 points
That equals $4,000 upfront

Now, lower points often look better. However, points must be viewed alongside term length. If one lender charges 3 points but gives you 18 months, that may work. Meanwhile, another lender may charge 1 point but only give you 6 months. So again, match the structure to your project.

6. What Other Fees Are Involved?

Points and interest are obvious. However, fees often hide in the fine print.

Common fees include:

• Underwriting fees

• Processing fees

• Doc fees

• Legal fees

• Appraisal fees

• Draw fees

• Inspection fees

• Wire fees

At closing, you must add all of this together. That total is your true cost of money.

For example, one lender may advertise lower points. However, they charge five extra fees. Meanwhile, another lender charges slightly higher points but almost no extra fees.

So always calculate the full cost.

7. What Are Their Lending Limits?

Next, what will they actually lend?

Ask:

• What percentage of purchase? (70%, 80%, 90%?)

• What percentage of rehab? (80%, 100%?)

• What LTV or ARV do they use?

Because not all deals are the same.

For example, maybe you’re doing a pop-top addition. Or maybe you’re adding square footage. Some lenders dislike those projects. Others welcome them.

Therefore, make sure the limits fit your deal. The right lender for one project may not be right for another.

8. What Experience Do They Require?

Experience matters — especially with larger institutional lenders.

Many lenders want:

• 2–5 flips in the last 3 years

If you don’t have that, they may lower your leverage. Or worse, they may deny the deal. However, many true hard money lenders care more about the deal itself.

For example, a contractor moving into flipping may qualify. A realtor who understands value may qualify.

So ask upfront:

• What experience do you require?

• What proof do you need?

That way, you avoid surprises.

9. How Does My Credit Score Affect Terms?

Finally, understand how your credit score impacts the loan.

Large lenders often reward high scores with:

• Higher LTV

• Lower rates

• Lower points

For example:

A 740 credit score may get 90% purchase and 100% rehab.
A 620 score may get 80% and 80%.

True hard money lenders usually focus less on score and more on the deal. However, they still want to see responsible behavior. If you use credit cards heavily but pay on time, many understand that. After all, investors use credit as part of the business. Still, ask how your score changes your terms. Because better terms mean more profit.

Final Thoughts: Funding Is Half the Game

Hard money loans can be powerful. They can help you move fast. They can help you secure strong deals. However, the wrong loan can eat your profit.

So before you commit:

1. Make sure they can close on time.

2. Make sure they fund the full amount.

3. Match pricing to timeline.

4. Understand interest.

5. Review points.

6. Calculate all fees.

7. Confirm lending limits.

8. Clarify experience requirements.

9. Know how credit affects terms.

Then, and only then, move forward. Because when you get your money right, your project runs smoother. And when your project runs smoother, your profits grow. Run your numbers. Compare lenders. Use tools that show you the full cost.

Good investing starts with smart funding.

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