what is a hard money loan

It is common for people to ask “what is a hard money loan?” Well, a hard money loan is a type of finance granted to real estate investors by individuals or non-banking institutions. It does not necessitate extensive credit checks because it is secured by collateral.


The investor chooses a hard money lender since the loan is disbursed rapidly, typically within a week, as opposed to standard banks, which take one to two months to issue the funds. Since it bridges the financial gap between the purchase and resale of a property, this type of loan is also known as a short-term bridge loan.


Who Are the Intended Borrowers?


Besides wondering what is a hard money loan, most people wonder who is eligible for this loan. The core market for hard money loans is real estate investors. Flipping a property and reselling it is usually a quick process. Hard money funding is used by investors who, for example, flip houses.


When a flipper discovers a fantastic offer on a home, they want to move quickly. They also sell the house quickly, so they don’t require a long loan term. Thus, hard money’s speedy funding appeals to them. The concept is similar if someone wishes to acquire a rental home as an investment.


How do you get a hard money loan?


Now that you know what is a hard money loan, it’s also essential to know how to get this loan. A potential borrower would obtain a hard money loan from a private investor or a corporation specializing in this type of lending. The lenders are exempt from the same rules as conforming lenders, allowing them to lend to anyone they wish. You won’t be able to find this option in your local bank.


The value of the property you’re using the money to acquire is more important to hard money lenders than your creditworthiness as a borrower. The common hard money loan-to-value ratios range from 60% to 70% but are not fixed since lenders can also set their rates. Even if a typical lender turns you down, a hard money lender may be able to help you.


If you’re an investor who wants to purchase a commercial building but can’t secure regular finance, hard money financing can help. Contact us today for professional assistance and comprehensive information about hard loans!