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Hard money is one of the most powerful tools real estate investors can use to move quickly and close with confidence.
However, it is also a serious financial commitment, and choosing the wrong lender can cost you time, money, and unnecessary stress.
Every lender operates a little differently, so understanding their terms, processes, and expectations upfront can help you avoid surprises and ensure the deal aligns with your goals.
Use the following 10 questions as a guide to finding a hard money lender in California that is the best fit for your project.
1. Are You a Direct Lender or a Broker?
It’s crucial to know whether the party funding your loan is a direct lender or a broker, as this directly impacts how fast, transparent, and cost-effective the loan process will be.
- Direct lenders use their own capital or raised funds to finance loans, which typically means quicker approvals, fewer fees, and direct communication with the final decision-maker.
- Brokers, by contrast, act as intermediaries who connect you with multiple lenders. This extra layer can slow the process and often increases overall borrowing costs.
In short, working with a direct hard money lender provides a faster, more transparent, and more cost-effective loan experience, giving you greater confidence and control over your real estate investment.
2. Are You a Local Lender?
Working with a local hard money lender can have a significant impact on your project’s speed, efficiency, and overall success. A local lender brings a deeper understanding of the market, faster response times, and access to a strong network of local professionals.
- Faster Approvals and Personalized Service
Local lenders can move quickly because they understand neighborhood-level property values and market trends. They also tend to offer more flexible, personalized service, making it easier to navigate unique challenges that may arise during your project. - Access to Local Networks
A local lender often provides connections to contractors, architects, appraisal companies, and other service providers who can help streamline your process and prevent costly delays. - In-Person Support and Confidence
With a local lender, you can meet in person and even have them visit the property. This adds an extra layer of confidence, especially when borrowing six- or seven-figure sums. - Stronger Relationships and Future Opportunities
Local lenders help build credibility and long-term relationships, which can make future deals smoother and more reliable. - Example: Los Angeles Hard Money Lenders
Choosing a Los Angeles–based lender for a project in the city can make a meaningful difference. Local lenders understand neighborhoods—from Silver Lake to Brentwood—and are familiar with realistic property values, zoning rules, and other regional nuances.
This local insight allows them to approve loans faster, provide accurate guidance for fix-and-flip projects, and offer a hands-on approach that remote lenders simply can’t match.
For a deeper look at why choosing a local Los Angeles hard money lender matters, check out our full article here.
3. Are You a Licensed California Hard Money Lender?
By law, every lender in California must hold a valid license, and their license ID should be clearly displayed on their website and all marketing materials.
You can use this ID to search the state’s database, which provides detailed information about the licensee, including any past disciplinary actions.
To verify a lender’s license in California, visit the CalBRE Public License Lookup.
4. Do You Have References or Online Reviews?
Asking a lender for references from previous borrowers helps you verify their character, reliability, and track record.
Unfortunately, there are a few bad apples in the lending industry who may change terms at the last minute, making it essential to check a lender’s legitimacy by reviewing their online reviews and customer feedback.
An abundance of five-star Google reviews can provide valuable insight into the experiences of past borrowers.
Since hard money loans involve significant sums and tight timelines, hearing directly from previous clients can reveal whether the lender delivers on promises, communicates effectively, and acts ethically.
References and reviews also shed light on how smoothly the loan process operates, any hidden fees to watch for, and how the lender handles challenging situations. All of this helps you make a safer, more informed decision.
5. What’s Your Interest Rate, and What Points or Fees Should I Expect?
A lender’s interest rate and origination points are the two biggest factors in determining the true cost of your loan.
Hard money interest rates and origination fees vary from lender to lender. Getting this information upfront allows you to compare offers accurately and make an informed choice.
Be sure to let lenders know you are shopping around for the best rates and points—this encourages them to offer their most competitive terms from the start.
- Interest Rate
Your interest rate is the annual cost of borrowing the capital.
Hard money interest rates are higher than traditional bank loans, typically ranging from 9% to 14%, depending on factors like whether the loan is in first or second position, the property’s location, loan-to-value ratio, and the property type and condition.
Borrowers pay this premium for speed, flexibility, and the ability to close deals that banks often won’t touch.
Checkout our full article on California Hard Money Loan Interest Rates in 2026. - Origination Points
Origination points are fees paid to the lender for facilitating the loan, expressed as a percentage of the loan amount.
For example, “2 points” on a $500,000 loan equals 2%, meaning you would pay the lender $10,000 at closing for their services.
Points can vary based on the borrower’s financial strength, experience, deal risk, and the amount of leverage requested. - Additional Fees and Considerations
When reviewing loan terms, be sure to ask about other fees, such as underwriting, document preparation, processing, and extensions, as well as any prepayment penalties.
Transparency around rates, points, and fees is essential to determine whether a lender is truly competitive and whether your project makes financial sense.
Check out our full guide on California Hard Money Loan Fees to learn more about what fees to expect.
6. What is Your Maximum Loan-to-Value (LTV)?
The loan-to-value (LTV) ratio measures how much capital a lender is willing to fund compared to the value of the collateral property.
Understanding LTV is crucial because it directly affects how much money you can borrow to make your deal work. Most hard money lenders base the LTV ratio on the property’s current value.
Some lenders take a conservative approach, offering lower LTV ratios and requiring you to contribute more of your own capital. Others are more aggressive, providing higher LTVs to experienced borrowers with strong deals.
Common LTV ranges:
- 55% to 65%: Low risk for lenders; easier to obtain funding.
- 65% to 75%: Typical range for most lenders.
- Over 75%: Possible, but usually requires extensive real estate experience and a property in prime condition.
- 90% to 100%: Very uncommon; proceed with caution, as this could indicate a scam.
Lenders offering 100% LTV are exceedingly rare and often a red flag. For more potential scams to watch out for, check out this article.
7. Are There Any Other Fees Associated with My Hard Money Loan?
Aside from interest rates and origination points, lenders often charge additional fees that can significantly impact the total cost of your loan.
These fees vary from lender to lender, so it’s important to get a clear understanding upfront to avoid surprises at closing.
Common Additional Fees:
- Underwriting fee: Covers the lender’s cost to evaluate the deal.
- Document preparation fee: Covers the cost of drafting loan documents.
- Processing fee: Administrative fee for executing your loan.
- Extension fee: Important to negotiate upfront in case you need extra time to complete your project.
- Appraisal or valuation fee: Borrowers typically pay for a third-party property valuation required by the lender.
Make sure the lender provides a complete fee sheet that clearly explains each charge. If any fee seems excessive or vague, treat it as a red flag and request clarification.
For a deeper look at which fees are standard and which may be questionable, check out our California Hard Money Loan Fees article.
8. Do You Have Pre-payment Penalties?
A typical hard money loan will last anywhere from 12 to 24 months.
Many lenders include a prepayment penalty of 3 to 6 months, meaning the loan must remain active for at least that period.
If you only need the loan for a month or two, be upfront with the lender; sometimes, they will agree to waive the fee if your situation allows it.
9. How Long Does the Approval and Funding Process Take?
If the borrower has all the required documentation, most lenders can complete pre-approval in a 5 to 10-minute phone call.
Full loan approval typically takes two to three days, with funding completed within an additional three to four business days.
Overall, you can expect funding to be finalized in 5 to 7 business days.
For a detailed breakdown of the typical approval and funding timeline, see the article How Long Does It Take to Get a Bridge Loan?
10. Do You Service Your Loans or Sell Them?
While most hard money lenders service the loans they fund in-house, others sell the loans to other lending, servicing, or investment companies.
This distinction is important because it determines who you’ll be communicating with throughout the life of the loan.
When lenders service the loans themselves, you typically get:
- Better communication
- A smoother process for requesting draws or extensions
- Greater flexibility if issues arise during the project
When a lender sells your loan, potential drawbacks include:
- An unfamiliar point of contact you’ve never met
- Stricter rules on draws
- Less flexibility for loan extensions
Always ask the lender to clarify their process and who will manage your loan after closing to ensure you have reliable support throughout your project.
The Bottom Line
Choosing the right hard money lender is just as important as selecting the right investment property.
By using these 10 essential questions as a roadmap, you can quickly identify which lenders are trustworthy and experienced—and which ones could delay your project, add unnecessary fees, or put your deal at risk.
A great lender is transparent, licensed, local, and willing to walk you through their rates, fees, and timelines.
They should offer competitive terms, clear communication, and ongoing support from underwriting through to final payoff.
Hard money loans can be incredibly powerful tools when used correctly—but only if you partner with a lender who has your best interests in mind and a deep understanding of the local market.
Handpicked Resources
California Hard Money Guide Hard Money
Why Choosing a Local Lender in Los Angeles Matters Hard Money
California Hard Money Interest Rates Hard Money
California Hard Money Fees Hard Money
Hard Money Lending Scams in California Hard Money
How To Get A Hard Money Loan in California
About the Author
Russell Barneson Hard Money Lending
Russell is a seasoned real estate investor, writer, and hard money lending strategist, as well as the co-founder of Crescent Lenders. He holds a degree from the University of Southern California’s Marshall School of Business. Outside of work, Russell enjoys surfing and spending time outdoors with his dog, Amy.