By Huber Bongolan
When it comes to real estate financing, a Letter of Intent (LOI) is often the first step toward securing a loan. But not all LOIs are created equal. Some lenders give them out like candy, barely understanding the deal in attempts to lock in clients. Others take a more thoughtful approach, ensuring that an LOI reflects a properly vetted deal.
At Flipside Lending, we make sure to ask the right questions upfront, so when we issue an LOI, you can trust that the terms are real.
So, what exactly is an LOI, and how should you evaluate one before moving forward? Let’s break it down.
A Letter of Intent (LOI) is a preliminary document that outlines the key terms of a proposed loan between a borrower and a lender. Think of it as a handshake before the formal contract—it sets expectations but is not legally binding.
An LOI typically includes:
While an LOI is not a commitment, it serves as a roadmap for structuring the loan.
Not all LOIs are created equal, and you should always read the fine print before accepting. Here are four key factors to consider:
1. Lender Reputation & Integrity
Some lenders issue LOIs just to lock borrowers in, only to change terms later. This is called re-trading—a bait-and-switch tactic where a lender suddenly increases the interest rate, lowers leverage, or adds recourse requirements that weren’t originally disclosed.
At Flipside Lending, we stand by our LOIs. Unless due diligence uncovers a major red flag, the terms we propose are the terms we deliver.
2. Are the Terms Competitive?
Compare the LOI terms with market standards. A few questions to ask:
If something seems off, ask the lender for clarification before signing.
3. Binding vs. Non-Binding Clauses
Most LOIs are non-binding, but some include certain provisions that do carry legal weight, such as:
At Flipside Lending, our LOIs clearly state that borrowers are responsible for third-party costs, but we don’t charge unnecessary junk fees.
An LOI is more than just a piece of paper—it sets the foundation for your financing. Whether you’re purchasing a fix-and-flip, refinancing an investment property, or securing a construction loan, understanding your LOI is crucial to avoiding surprises later.
At Flipside Lending, we believe in transparency, integrity, and honoring our terms. If you’re looking for financing that you can trust, let’s talk.
Interested in learning more? Contact us today to discuss your next deal.
Good luck out there, my friends. I’m always happy to help so feel free to email me at hbongolan@flipsideloans.com.
NMLS #2655708. Origination fees and other fees may apply. This is not an offer to lend. Any financing will be subject to certain restrictions and requirements, including but not limited to a credit evaluation and approval of the subject property. To qualify, a borrower must meet underwriting requirements. Not all borrowers will qualify and not all borrowers that qualify will receive the lowest rate. Your actual rate depends on a variety of factors. Rates, terms, and conditions are subject to change from time to time without notice.