Hard money loans are an alternative financing option for people looking to purchase or refinance real estate. They offer a fast and straightforward way to obtain funding without the hassle of dealing with traditional lenders. But before taking out a hard money loan, it is important to understand how they work and what their benefits and drawbacks are.

What is a Hard Money Loan?

Hard money loans are short-term, high-interest loans made by private lenders — typically individuals or small companies. They’re often used to fund real estate transactions because they usually require less paperwork and no credit score requirements. The primary benefit of a hard money loan is that it provides fast access to capital without the long wait times associated with traditional lenders.

Applying For a Hard Money Loan

When applying for a hard money loan, applicants typically provide the lender with financial documents such as tax returns and bank statements, along with proof of income and/or assets. Generally, these documents are reviewed quickly, and the lender will decide whether to approve or deny the loan within a few days — something that would normally take weeks or months with a traditional lender.

Considerations

Hard money loans also have some aspects that must be considered before taking one out. Most notably, they come with terms that differ from traditional loans. In addition, hard money lenders may require borrowers to provide collateral as security for the loan, such as real estate or other assets. Finally, hard money loans are typically short-term and must be paid back within the time allotted.

Overall, hard money loans can be a great way to obtain fast financing for real estate transactions — if applicants understand the risks and fees associated with such loans. Lending Hub offers hard money loans with generous terms and fast closings, so you can get the financing you need. Contact our team today to learn more.