Hard Money Loans – Reasons for Your First Stop

It is very much common to see that mortgage industry insiders often refer to hard money lenders as a last resort. It is true as because borrowers put it to their last choice to go for a hard money loan before slotting through traditional banking institutions. But hard money loans are easier to get and funded at lightning speed. Let us take a look how hard money lenders can be the first stop to borrowers instead of a last resort.


Hard money loans are far better from conventional loans as the guidelines are far different from the local institutions. It is termed as asset based lending as the collateral on the loan becomes the real estate property. Those seeking emergency funding and those with time sensitive situations can opt for a hard money lender as they can close quickly in days. Some hard money lenders do look at the credit history of the borrower, but most do not bother to check the history.

Basically based on their criteria, hard money lenders lend their money on a short – term basis, usually 6 months to 1 year to borrowers who use it for variable purposes. These may include real estate loan types: bridge, refinance, development, acquisition, rehab, etc. The loan will usually vary from private lender to lender in cases like upfront application fee, due diligence fee and commitment fee. Some lenders may fund interest, origination fees, and rehab money while other will not. Once selecting hard money lender will need to go through these options so that you can understand the best possibilities to fit your plans.

Thus there are many benefits to choose a hard money lender to get a hard money loan. If the down payment money is tight and your credit is not perfect, it can be closed in 5 – 14 days. They require minimum of necessary documentation with no problem with poor credit history. The lenders are quiet experienced to fill up the funding gap if any occurs during the project is in progress. This can only take place with the production of proper documents by the borrower. Unlike traditional lenders hard money lenders can give out loans to foreign nationals. Personal guarantees are not require for such loans as the loans are based on the value of the property.

There is always a question as to why hard money lenders loan money when traditional lending institutions do not bother to gamble. This is because the hard money lenders charge higher rates than other traditional lending institutions. Also the lenders require the borrowers to have at least 25 – 30 percent equity in real estate as collateral. Thus hard money loans may be the last resort for many borrowers, but there are a lot of scenarios where hard money lenders are the only way to go in the market.

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