Hard Money Loan
A hard money loan is a short-term loan that is secured by real estate and is funded by private investors, instead of conventional lenders like credit unions or banks. The standard term is for about 12 months, but you can extend the terms to around 2 to 5 years. You pay back the loan in monthly installments with interest or some with interest principal and a balloon payment when the term finishes.
The value of the property will determine the amount hard money lenders will be comfortable loaning to the borrowers. The property can be one that the borrower is looking to acquire, or it could be one that the borrower owns and wants to use as collateral. Hard money lenders aren’t concerned about the borrower’s credit as they focus on the property’s value. That means borrowers who fail to get financing through conventional means due to a short sale or a foreclosure can acquire a hard money loan if the property they are using as collateral has enough equity.
Property Types
You can get a hard money loan for any type of property, even if it is industrial, land, commercial, multi-family residential, or single-family residential.
What Should You Use Hard Money Loan for?
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Where real estate investors need to invest quickly
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When the buyer is facing credit issues
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When you require construction loans
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Where there are land loans necessary
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When you’re looking to fix and flip properties