Before you choose a private lender, ask about licensing, how long closing really takes, every fee, extension and prepayment terms, who makes the decision, and what happens if your file is declined. Private loans are fast and flexible, which makes the details of each lender's terms more important, not less.
Use the checklist below with any lender, including us. A good lender will answer plainly and in writing.
1. Is the lender licensed, and can you verify it?
In California, a lender or broker arranging loans secured by real estate generally must be licensed. Do not rely on a website's say-so. Ask for the license number and check it with the state regulator yourself. US Lending & Company is a licensed California private money broker through the California Department of Real Estate and is registered with the Nationwide Mortgage Licensing System. You can find our licensing links in the footer of this site, and we encourage you to verify them.
Also ask whether the lender is a direct lender or a broker placing your loan with others. Neither is inherently wrong, but you should know which you are dealing with.
2. What is the realistic timeline?
Speed is the reason many people choose private lending, so test the claim. Ask what the timeline assumes and what slows it down. We say approval can come in as little as 24 hours and funding in as little as seven days, subject to a complete file, underwriting, title review and property valuation. The phrases "as little as" and "subject to" are doing real work: an incomplete file, a title problem or a valuation issue can lengthen the process. Be wary of any lender that promises a date with no conditions. Our article on how fast a hard money loan closes goes into this.
Key takeaways
- Verify licensing yourself with the regulator rather than trusting a claim.
- Ask for the full cost in writing, including every fee and what is paid at closing.
- Understand extension and prepayment terms before you sign, not after.
- Ask who makes the decision and how a decline is explained.
3. What will this loan cost in total?
Ask for every cost: interest, origination points, processing, underwriting, appraisal or valuation, title and escrow, legal, servicing, and anything else. Then ask what is deducted from the loan proceeds at closing, because that determines the cash you actually receive. Compare lenders on the total cost over your expected holding period, not just the stated rate. Our guide on how hard money loans are priced explains the components.
4. What are the extension and prepayment terms?
Plans slip. Ask whether the loan can be extended, what an extension costs and what conditions apply. Ask whether there is any prepayment charge or minimum interest, and what happens if you pay off early. Ask what the default terms are and what happens if you pay late. These answers matter most when something goes wrong, which is exactly when you do not want surprises. See exit strategies for a bridge loan for planning ahead.
5. Who underwrites, and how?
Ask who actually reviews your file and makes the decision, and whether you will speak to that person. Ask what the lender weighs. Our underwriting is equity-led, focused on property equity, capacity to make payments and exit, and every application is reviewed individually. Whatever a lender's approach, you should be able to understand it. Also ask who funds the loan: the lender's own capital or investors, and how the loan will be serviced afterward.
6. How do they handle declines and problems?
No lender approves everything. Ask what happens if your file does not fit: will they explain why, tell you what could change the answer and release you quickly so you can look elsewhere? A clear no, early, is a service. Our article on why private loans get declined can help you prepare.
7. Do they fit your deal?
Finally, ask whether the lender regularly makes your type of loan, whether residential, commercial, construction or apartment. A lender that knows your property type will ask better questions and spot problems sooner.
Have questions for us? Call (800) 943-1314 or start an application. Approval is not guaranteed. General information only, not legal, tax or investment advice.
Published by the US Lending & Company underwriting desk. General information only — not legal, tax or investment advice.