Frequently Asked Questions

Hard Money Lending (HML) is typically more institutional than Private Money Lending (PML). The most prominent differentiator is that PML is between you and an individual. HML follows stricter guidelines and carries more fees and typically higher rates.

Both HML & PML can carry fees and high rates, but as a full-time investor you will likely never have enough private money available to you.

Your growth as a Real Estate Investor will require more and more money. You will soon find yourself in a position with your individual private lenders where you have to make decisions based on how much money is available. This is a GOOD thing!! These are good problems to have as it means you are growing and having more opportunities presented to you.

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We only lend on non-owner occupied properties. We lend to the title holder on the property, which must be a business entity, typically a corporation or an LLC.

Hard, or private, lending is commercial lending on real estate that is generally for short term use to acquire and/or renovate property and is based primarily on the quality of the asset (the property) not the income or credit of the borrower.

A borrower’s credit is only a minor factor in our underwriting. We prefer to see a credit score of 620 or better, but the stronger the asset, the less a borrower’s credit matters.

Yes, at this time we are only lending in Wisconsin. Our value is in being your LOCAL, direct lender. So, we only lend where we have a local presence and expertise.

YES! We are happy to work with brokers and will protect your commission and client relationship. We are in the long-term relationship business, not the short-term transaction business.

More experience will generally mean more favorable terms. We work with experienced investors and first-timers.

Yes, we never charge a pre-payment penalty for our loans.

We do NOT sell our loans to any third parties, as most lenders do. You will deal with Connection Funding throughout the life of your loan.

Before we ask for ANY fees, we will have a conversation with you about the property and your plans for it. We’ll give you our initial feeling about your valuation expectations and whether we feel we can do the loan you are requesting, pending other underwriting data. We will give you a formal term sheet that spells out all the details we expect for your loan. Once you approve the term sheet, we charge an application fee to cover our initial property analysis (including meeting you at the property!), our credit & background reports on any guarantors, and the cost of getting our attorney to start reviewing title. You will also need to pay for an appraisal up front. We have an underwriting fee charged at closing along with our loan origination fee. If you have a construction holdback on your loan (for a rehab), each draw has an inspection fee. You decide how many draws you want to have so you control the number of those fees.

Most of our loans are interest only, but we may do a P&I loan if we both agree it is a good idea for your circumstances.

You will pay for and complete work on the property and then call for an inspection. Connection Funding will send an inspector to the property to evaluate the state of completion of the work according to the schedule planned for the content of the draw. Based on the information in the report, we will fund that draw based on the percent complete within 2-3 business days of the inspection. It is best to request the inspection to be scheduled when you project to be complete with that draw’s items rather than waiting until you are complete, as it may take a couple of days to schedule the inspection.

Yes, you should always add 5-10% to your budget to cover the unexpected.

Origination points, often simply referred to as "points", are used to calculate an upfront fee that lenders charge to issue a loan. Such an upfront fee allows lenders to avoid prepayment penalties and still make profitable loans. One point is equal to 1% of the loan amount.

This will depend on a variety of factors, but generally we require a borrower to come up with at least 15% of the purchase price as a down payment.

Yes. We require both lender’s title insurance and a builder’s risk/homeowner’s insurance policy naming us as the mortgagee and paid for the term of the loan at closing.

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