10 Important Questions to Ask Your Hard Money/Private Lender
1. How do you charge interest on construction loans?
Many private lenders charge interest on the total loan amount (acquisition and renovation) from the day of closing regardless of when rehab funds are disbursed. Pinnacle only charges interest on disbursed renovation funds as needed which can save our borrowers thousands of dollars on a single project.
2. Have you ever run out of capital?
It is very important to know that you can consistently rely on your lender for funding. Many private lenders have to turn away business due to lack of funding. Since we have been in business, Pinnacle has never run out of capital.
3. Can you provide pre-approval letters?
Many of our competitors cannot write pre-approval letters at all or without expirations because they do not have adequate funding to make that commitment. Pinnacle provides pre-approval letters upon request which allows our borrowers to submit offers with confidence.
4. Can you provide 100% rehab funding for extensive renovations?
Many private lenders often cap rehab funding for extensive renovation projects or avoid them completely. Pinnacle’s owners, Mark and Ian Cohen, both have extensive backgrounds in the remodeling business. As a result we have a unique comfort level for funding large rehab projects, frequently providing financing for repairs in excess of $100,000.
5. What happens if a loan is not paid off within the one year term?
Make sure you that you are aware of any additional fees or penalties charged for going over the term of your loan. Many hard money lenders will charge additional points or increase the interest rate if the loan is not paid off by maturity. We are very flexible with our borrowers, typically extending the term with no points or change in interest rate for up to three additional months.
6. Do you charge any additional fees?
Many lenders require third party appraisals, loan servicing, initial property inspections, and draw inspections for each construction disbursement; this can result in substantial unexpected fees. Pinnacle handles everything in house which allows us to avoid charging any additional fees to our borrowers.
7. How quickly can you close a loan?
Typically hard money lenders can take up to two weeks to close. We understand the time sensitive nature of the business which is why we have developed a streamlined process to close loans in less than five days. Faster closings mean more deals for our customers.
8. Do you provide any services in addition to lending?
We help our real estate investors make valuable connections with local REO agents, property wholesales and contractors. We are also able to help our customers secure great rehab projects through our vast network of real estate connections throughout Connecticut. Our customers benefit from our remodeling background because of our extensive contractor and sub contractor relationships.
9. Will you lend anywhere in Connecticut?
Many private lenders will not provide funding throughout the entire state. Pinnacle does.
10. Will you provide funding for more multiple projects?
Pinnacle can provide funding for several projects at a time for an individual or business entity. We will lend up to $500,000 per individual or entity.