What is a Hard Money Loan?

A Hard Money Loan is a type of loan that is secured by a real property. These loans have terms based mainly on the value of the property being used as collateral instead of the creditworthiness of the borrower. These loans may be sought by property flippers who plan to renovate and resell the real estate that is used as collateral. The higher cost of a hard money loan is offset by the fact that the borrower intends to pay off the loan relatively quickly, usually within 12 months or less, and for some of the other advantages they offer.

Some of these advantages are quicker access to capital, less stringent approval process, and potential flexibility in the repayment schedule. Hard money loans may be used in turnaround situations, short-term financing, and by borrowers with poor credit but substantial equity in their property. Hard Money Loans are strictly for Investment Properties.

Hard Money Loan Requirements