Use this checklist before you (the Borrower) sign any loan documents.

1.  Loan Purpose & Classification

☐ How is this loan being classified—consumer or business purpose?
☐ What specific use of funds supports that classification?
☐ Is that purpose documented in writing?
☐ If this is called “business purpose,” can someone explain why—clearly?

Why it matters: Understanding how the loan purpose affects your legal rights and protections helps you avoid future disputes or surprises.

2.  Lender Licensing

☐ What license does the lender or broker hold in California?
☐ Is the license active and appropriate for this type of loan?
☐ Is the loan being arranged by a licensed real estate broker or lender?
☐ Who is originating the loan?

Why it matters: Recognizing licensing red flags ensures you work with legitimate lenders, protecting you from scams or unenforceable loans.

3.  Mortgage Loan Originator (MLO)

☐ Is a licensed mortgage loan originator required for this loan?
☐ If yes, who is the MLO and what is their license number?
☐ Who is being paid origination or referral fees?

Why it matters: Some loans require licensed origination—even in private lending.

4.  Interest Rate & Fees

☐ What is the true APR (not just the interest rate)?
☐ What fees are included in that APR?
☐ Are any fees paid to brokers, affiliates, or third parties?
☐ Is this loan exempt from California usury limits—and why?

Why it matters: Fees and structure determine whether rates are legally enforceable.

5.  Federal Consumer Protections

☐ Do federal laws like TILA or Dodd‑Frank apply to this loan?
☐ If yes, what disclosures should I receive?
☐ Is there a right of rescission or cooling‑off period?

Why it matters: Knowing what disclosures to expect helps you verify that the lender complies with federal laws, safeguarding your rights.

6.  Property & Occupancy

☐ Is the property considered owner‑occupied, non‑owner‑occupied, or mixed‑use?
☐ Does that classification affect how the loan is regulated?
☐ If I plan to occupy the property later, does that change anything?

Why it matters: Occupancy can trigger different legal treatment—even after closing.

7.  Future Risk Questions

☐ Could this loan be challenged later if it’s misclassified?
☐ What happens if I refinance, sell, or dispute the loan later?
☐ Has this structure been reviewed for compliance—not just speed?

Why it matters: Problems often surface after funding, not at closing.

8.  Documentation & Disclosures

☐ Do the loan documents match what was promised verbally?
☐ Have I received all required disclosures in writing?
☐ Do I understand the default provisions and remedies?

Why it matters: Verbal assurances don’t survive audits or disputes.

9.  Professional Review

☐ Has a real estate attorney reviewed this loan?
☐ Has anyone explained the risks in plain English?
☐ Am I being rushed to sign without answers?

Why it matters: Speed is never a substitute for understanding.

10.  Final Borrower Reality Check

☐ Do I fully understand what I’m signing?
☐ Would this loan structure still make sense under scrutiny?
☐ Have I asked enough questions—or just accepted assumptions?

One Borrower Rule to Remember

Fast money is useful.
Bad structure is expensive.

If you’re unsure about any answer above, pause—and get clarity before you sign.