It’s not uncommon to find hard money loan scams when you’re looking for a reputable broker. Unfortunately, many new – and even experienced – real estate investors fall prey to these scammers.
So what should you watch out for?
Signs of a Hard Money Loan Scam
While many scammers throw up plenty of red flags, here’s what you need to watch for:
- A lender that doesn’t consider your credit history. Legitimate lenders are concerned about your credit history, although to varying degrees. Often, with a hard money loan, your credit score isn’t as important as the type of property you are interested in buying and the amount of the loan you wish to borrow. However, it still matters.
- A lender that asks for an upfront fee before he or she will grant you a loan. A legitimate lender will disclose fees clearly and won’t charge one up front.
- A lender that isn’t registered in Georgia. Lenders are required to register in the states where they do business, so a legitimate one will be registered to lend here.
- A lender that asks you to wire the money or pay an individual person.
Other red flags include claims that seem too good to be true (and as with anything, if it seems too good to be true, it probably is). Those claims can include:
- No collateral or unsecured loans
- 1-hour loan processing
- Get funding within 24 to 48 hours
- Extremely low interest rates
- Prepay insurance to get the loan
- Loan delivery through Western Union, MoneyGram or bank transfer
What Should You Look for in a Hard Money Lender?
If you are considering taking a hard money loan, you should work with a private hard money lender who works directly with the public.
Let’s talk about your hard money loan. You can learn about our loan process, see if you fit our loan criteria and even apply for a hard money loan online.
Call us at 404-814-1644 or get in touch with us online so we can answer your questions.