Frequently Asked Questions About Hard Money Loans

Hard money loans are generally easier to start than conventional bank loans. We need basic information through our loan application, then we evaluate the project and provide the general terms and conditions needed to fund it. We will hold a first lien position and review your ability to rehab, sell, or refinance the property within the loan term.

Yes, it may be possible. The main criteria for a hard money loan is often the loan-to-ARV ratio, or after-repair value. Credit history is considered, but it is not weighed the same way it is in a traditional bank loan. If the project is a fit, we can provide a pre-approval letter for your purchase contract.

We need copies of contracts, appraisals, comparable sales, and any other information that helps us evaluate the property quickly. The more clear project information you provide, the faster we can review the deal.

Yes. We determine value through a licensed appraisal, a broker price opinion, internal underwriting, or a combination of these methods. You may be charged up front for valuation work, and those fees are generally non-refundable.

Maybe. Every deal is different. Once your project is preliminarily reviewed, the underwriter will tell you which documents are needed.

Fees depend on the loan-to-ARV ratio, the loan amount, the timing, and the project. We can give a firm answer after reviewing your deal. Common hard money loan costs may include:

• Appraisal or valuation fees.
• Document preparation fees.
• A commitment fee when funds need to be reserved before settlement.
• Origination points, often structured as a percentage of the loan amount.
• Monthly interest, usually paid during the loan term or handled according to the approved loan structure.

These items are listed as general guidelines only. Actual fees and terms are disclosed before settlement.

Each hard money deal has different criteria, rates, points, and structure. As a general rule, hard money loans often carry higher rates and points than conventional loans because they are short-term, private-capital loans. All loan terms are disclosed up front and before settlement.

We often require a three-month minimum guaranteed interest period. The exact requirement is provided in the commitment letter.

Sometimes we may allow points to be rolled into the loan. However, title fees, lender fees, and other closing costs usually need to be paid by the borrower at closing.

No. Most hard money loans are interest-only and have a balloon payment after 6 to 12 months, meaning the principal balance is due at the end of the loan term.

We usually lend based on the appraised after-repair value. If you purchase a property significantly below its ARV, it may be possible to finance a high percentage of the purchase price, although closing costs are usually still paid separately.

Hard money is not appropriate in every situation. It is usually not a fit when you need long-term money, when the deal has too little equity or margin, when the property is unusual or difficult to value, or when the property is your primary residence.

No. State and federal laws have strict disclosure requirements for consumer mortgage loans. WCLD is not licensed for consumer mortgage loans and does not lend on primary residences.

Maybe. Hard money loans can close quickly, so we may be able to help depending on the timing and the property. If we cannot close before the foreclosure date, there may still be other options. You should also review your options with a real estate attorney or an experienced foreclosure consultant.

A home equity line may have a lower rate, but using too much existing credit can lower your credit score and signal financial stress to other creditors. Many private hard money lenders do not report to credit bureaus, which may help protect your credit profile depending on the situation.

Judgments and liens on title must be paid at closing. After those items are paid, you may be able to use additional equity for cash out, subject to loan-to-value limits and approved loan terms.

Sometimes. We generally lend up to a conservative percentage of the property value. If you buy a property at a deep discount, you may be able to finance a high percentage of the purchase price. Rehab properties may require additional borrower funds or a construction escrow to make sure repairs are completed.

We currently lend on residential investment properties and light commercial properties, including 1-4 unit properties, smaller apartment buildings, small retail or office buildings, small restaurants or bars where real estate is involved, single-family investment homes, and strip shopping centers. For larger projects, we may be able to refer you to another commercial lender in our network.

Yes. As with a conventional loan, we require a title search to confirm proper title and first lien position. You will also pay for the title or escrow company to close the loan, record the mortgage or deed of trust, and issue lender’s title insurance.

We generally lend within a 50-mile radius of the Washington DC metropolitan area, including nearby Maryland and Northern Virginia markets. We have gone beyond that radius on some occasions.

Washington Commercial Lending & Development, LLC is not a licensed mortgage lender and does not lend on primary residences. We are a commercial and investment lender. Loans are funded by us or by private capital sources, and we may broker hard money loans to other lenders within our network for a fee.