What is a Hard Money Loan?

Interested in finding out more information regarding hard money loans? You’re in the right place.

Hard Money Lending Made Easy

Hard Money Loans are a way to borrow money from individuals or investors rather than traditional mortgage lenders. These individuals or investors lend money based on the piece of property you are using as collateral. They typically loan only to those who are looking to reinvest into other properties.

Getting approved by a traditional lender is a slow process and you may not even get the money you want. The application process for a Hard Money Loan is simpler and faster.

How Long is The Term of a Hard Money Loan?

It is a short-term loan (1-5 years) that is based on the piece of property you put up for collateral.

Individuals and investors are less concerned about your ability to repay the loan because, if anything goes wrong and you default on the loan, they will take ownership of the collateral and put it up for sale to make back the money they lost.

Some advantages to a Hard Money Loan are speed, flexibility, and almost guaranteed approval.

The flexibility of a hard money loan gives you options depending on your situation, to tweak things like your repayment schedule, whereas traditional mortgage lenders would not.

The approval for a hard money loan is easier than with a traditional mortgage lender.

If you have a piece of property to put up for collateral, the lender will lend you as much as the property is worth.

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Other Hard Money Frequently Asked Questions…

Why Do People Usually Contact Hard Money Lenders?
The best example to use, to show you when you should use a hard money loan is on Fix-and-flip properties. These investors are a good example of hard money users: they own the property just long enough to increase the value of it and then sell the property and pay back the loan. Now it is possible to use a hard money loan to buy a property to live in, but you would want to refinance as soon as you could find a better loan.
What Are Some Disadvantages of Getting a Hard Money Loan?
Some drawbacks to a Hard Money Loan are they are not perfect. These loans to tend to seem simple- an asset secures the loan so everyone is safe- but can be very expensive. So, your business plan must work perfectly in order for profits to materialize. Interest rates for these types of loans are in the double digits compared to a loan from a mortgage company where the interest rates are normally in the single digit range.
Is It Difficult to Receive a Hard Money Loan?
Getting approved for a hard money loan is usually a very simple and straight forward process as long as you have property to give your hard money lender for collateral.
Does a Hard Money Loan Take a Long Time For Approval or Denial?
Waiting for approval or denial for a hard money loan typically only takes a day or two and is a lot faster than receiving a loan from a typical mortgage lender.

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