Frequently Asked Questions
Hard money lending is a type of short-term, asset-based loan where the borrower receives funds secured by the value of a real estate property. Unlike traditional loans, hard money loans are usually provided by private investors or companies rather than traditional financial institutions.
Hard money loans are commonly used by real estate investors and developers who need quick financing for property acquisitions, renovations, or other real estate projects. Borrowers who may have difficulty obtaining financing from traditional lenders due to credit issues or the need for a speedy transaction also turn to hard money lenders.
Hard money lenders base their lending decisions primarily on the value of the property being used as collateral, rather than the borrower's creditworthiness. The approval process is generally quicker than that of traditional loans, often taking a matter of days. Lenders assess the property's value, the borrower's equity, and the overall feasibility of the project.
Interest rates for hard money loans are higher than those for traditional loan and are affected by prevailing interest rates. The rates are higher due to the increased risk assumed by the lender and the short-term nature of these loans.