texas approved Hard MoneyO.K., you have your property all scoped out.  You’ve decided that you are going to fund your investment with a hard money loan.  You contact an excellent rehab lender, and they tell you what information you will need to produce in order to get the loan process started.  Now you have the forms in front of you, but all of a sudden, you wonder what you were thinking when you decided to take such a leap of faith.  Well, just relax.   In all probability, you have done this before, but this is your first bridge loan?  No problem, let’s go through this step by step.

Every experienced hard money lender is going to want you to have an Appraisal Authorization.  This is simply a form that authorizes your hard money lender to have an appraisal ordered for your property.  The lender will then request an appraisal from a qualified appraiser who has experience in evaluating investment properties.  The “bottom line” is that the appraiser will come up with an “after repaired value” price (ARV) which will be determined by looking at the “as is” property, and then, on the repairs that you are going to have done to the property.

There will also be a Borrower Application.  It is, as the name implies, a form that will ask questions about your financial status, a copy of your bank statements, and other paperwork that is normally required in the lending process.

Initial List of Repairs is, of course, necessary in order to get your appraisal.  It also will give your lenders the approximate amount of money needed to do the repairs and improvements.  This form is extremely thorough, but easy to complete.

The Insurance Requirements form requires that you provide the lenders a one year policy, with the declaration page and invoice made out to the title company and the lender.  The policy has to be provided at least 24 hours before closing.  The amount of the insurance must be equal to the amount of the loan.

The Loan Request Form is a form that asks for information about the property for which you require the loan; a description about the property; a listing of comparable properties in the neighborhood; and a rough idea of the time frame for rehabbing your property.

The Property Evaluation Worksheet asks for an explanation of your plans for rehabbing the property and your “exit strategy”. In other words, what will you do with the property when you have finished rehabbing it?  Will you “flip” the property, refinance, or rehab and rent?

The Statement of Understanding is just that. It asks if you understand what is involved in the loan, such as, the steps that are involved in acquiring, rehabbing, and what inspections will be necessary for the loan approval.

And, just to be on the safe side, there is a Loan Application Checklist which is a form with all the required steps listed so that they can be “checked off” when each has been completed.