Tag Archive for: interest rate

9 Questions to Ask Before You Commit to a Hard Money Loan

/in

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.

 Watch our most recent video today on: 9 questions to ask before you commit to a hard money loan

How to Sell Your Fix and Flips Faster in 2025

/in ,

Today we are going to review how to sell your fix and flips faster in 2025. Selling a fix-and-flip property quickly can mean the difference between a good profit and unnecessary losses. With rising interest rates, it’s more important than ever to make your property attractive and affordable to buyers. Here are practical steps to sell your fix-and-flips faster while maximizing your profits.

Why Affordability Matters More Than Ever

In 2025, most buyers focus on payments, not just price. Whether it’s a car, a boat, or a house, people think in terms of what fits their budget—and what they can qualify for. For a property to sell quickly, you need to control the buyer’s monthly payment. That means focusing on two key numbers:

  1. The purchase price
  2. The interest rate

Instead of dropping your price, consider strategies to lower the interest rate for your buyers. This expands the pool of people who can afford your property, creating more competition and selling your property faster.

Example: $400,000 Property in a High-Interest Market

Let’s say you’re selling a property for $400,000. Current market interest rates are 6.875%, and your target is to keep the monthly principal and interest payment under $2,000. Here’s how the numbers play out:

  • At 6.875%, the payment for an 80% loan (with 20% down) would be $2,100.
  • To attract more buyers, you need to lower the payment below $2,000. This could double or triple the number of potential buyers who qualify.

You have two main options to achieve this:

Option 1: Drop the Purchase Price

A common strategy is to reduce the property price. Here’s what that looks like:

  • A 5% price drop from $400,000 brings the price down to $380,000.
  • At 6.875%, the payment drops to $1,997.

This method works, but it costs you $20,000. If your profit margin was 10%, you just lost 50% of your profits. For a 15% margin, you lose a third of your profits. That’s a significant hit just to open up the buyer pool.

Option 2: Buy Down the Interest Rate

Instead of reducing the price, focus on lowering the buyer’s interest rate. Here’s how:

  • Keep the purchase price at $400,000.
  • Offer to buy down the buyer’s interest rate by 1.5 points.
  • The cost of the rate buy-down is based on the loan amount, not the purchase price. For an 80% loan of $320,000, 1.5 points would cost $4,800.

This strategy lowers the payment to $1,996, the same as the price drop, but it costs only $4,800 instead of $20,000. By focusing on payments rather than price, you keep more money in your pocket while still attracting more buyers.

How to Market This Strategy

When advertising your property, emphasize lower monthly payments, not the buy-down itself. Many buyers and even Realtors don’t fully understand rate buy-downs, but everyone understands affordability. Use phrases like:

  • “Affordable monthly payments”
  • “Lower payment options available”
  • “Permanent payment savings”

Highlighting the payment advantage makes your property stand out in a competitive market.

Key Takeaways for 2025 Fix-and-Flips

  1. Buyers focus on payments, not just price.
  2. Lowering the interest rate is often more cost-effective than dropping the price.
  3. Market your property by emphasizing affordability and payment savings.

At Hard Money Mike, we’re here to help you succeed with your fix-and-flips. Whether you need financing for your next project or strategies to sell faster, we’ve got you covered. Reach out to us for the best tools, rates, and terms to make your projects a success.

Watch our most recent video to find out more about: How to Sell Your Fix and Flips Faster in 2025