What Is A Hard Money Loan

Dated: 08/26/2019

Views: 249

Unless you are investing in real estate you probably have never heard of a Hard Money Loan (or "private money loan").  Simply put a hard money loan is a short-term loan secured by real estate.  Private investors fund these loans as opposed to conventional lenders such as banks or credit unions.  Terms of the loan are usually 12 months, but may be extended to longer terms of 2-5 years.  You are required to make a monthly payments of only interest or interest and some principal with a balloon payment at the end of the term.  The amount a hard money lenders are able to lend is based on the value of the subject property.  The property may be one the borrower already owns and wishes to use as collateral or it may be one the borrower is acquiring.    A borrower can get a Hard Money Loan on almost any type of property (single family residential, multi family residential, commercial, etc.).  Interest rates vary from lender to lender but due to the risk involved for the lender they tend to be higher than conventional loans.   Rates usually range from 10-15% and also may vary depending on the loan to value ratio.

In most cases Hard Money Loans are used for: 

  1. Fix and Flips

  2. Land Loans

  3. Construction Loans

  4. If Buyer Has Credit Issues

  5. If A Real Estate Investor needs to act quickly 

How to find a Lender to work with

An easy way to find a local Hard Money Lender is to do a simple Google search in your area.  This should give you a good amount of lenders to contact and begin your evaluation! 

Another great way to find a lender is to attend local networking meetings.  Many of these meetings exist in local cities and are well-attended by local Hard Money Lenders.


It is my hope that you have found this article useful and if you have any further questions please feel free to reach out to me directly at danny@rehomepros.com 

Want to Advertise on this Site?

Latest Blog Posts

COULD YOUR HOME OFFICE BE DANGEROUS

May 26, 2020As more people are working from home due to the pandemic, the safety of at-home work environments is coming under scrutiny.Workplaces are legally mandated to maintain strict safety

Read More

MAKE YOUR OWN HAND SANITIZER

How to Make Hand SanitizerAs a former public school employee, hand sanitizer was a mainstay on my desk. (And in any other strategic location that might encourage students to use it when needed.)

Read More

5 Tips For Selling Your Home During The Coronavirus Pandemic

https://www.forbes.com/sites/taramastroeni/2020/03/24/5-tips-for-selling-your-home-during-the-coronavirus-pandemic/

Read More

313 Year Old House Believed To Be The 1st Ever Built In NJ Town Is For Sale

https://www.nj.com/bergen/2020/03/313-year-old-house-believed-to-be-the-1st-ever-built-in-nj-town-is-for-sale

Read More