Anyone with hard money experience knows quoting double-digit interest rates and several points in fees inspires some of the more dramatic borrower responses in the industry. Brokers and lenders witness everything from stunned silence to emphatic resentment. For borrowers with little or no experience with the hard money loans, a basic level of understanding will aid immensely in the process of funding a hard money loan.

From Motivation to Understanding

Armed with an awareness of your client’s motivation, your next step is to ascertain and develop your client’s level of understanding of pricing options available. “Level of understanding” as it pertains to hard money loans is your client’s level of realization that they will have to pay 10% or more, plus points and fees, to obtain a Hard Money Loan

Generally speaking, the earlier the client is in the process, the more resistant they are to the reality that they are in a hard money situation. Asking some basic questions will help them understand the position they are in:

• What is your current interest rate?
• What steps have you taken so far to obtain a loan?
• Has another lender turned you down for financing? Why?
• How is your relationship with your bank?
• How would you rate your credit?

You may find that your client has already attempted to obtain a loan from their bank. In other cases they have worked with another broker who tried to place them in a hard money loan that did not close for one reason or another. Credit score alone may be the focus of a conversation about hard money.

Your Opportunity to Be the ExpertWherever your client is in the process, you can illustrate to them that a higher interest rate solution doesn’t necessarily compromise the ability to satisfy their original need for a loan. This is an invaluable opportunity for you to bring your client forward on the scale of understanding, which will make funding the loan a much smoother process. It also solidly establishes you in a position as a qualified expert to your client so that, should your client be shopping for a loan in the future, they will know who to call first.