Why use a Hard Money Loan?

Hard money loans are loans that are short term loans, usually six to twelve months in term. The interest rates are higher than conventional loan rates. The payments are usually interest only, and have a balloon payment at the end of the term.

Here are just a few reasons that people will borrow hard money:

1. A person finds an opportunity to purchase below market priced real estate. They need the money NOW! And cannot wait the 45-90 days to obtain traditional commercial financing. If a person is “buttoned up” and has all their plans and documentation related to themselves and the project, a quick closing within 5-10 business days is not out of the question. If a person has enough collateral, it may be possible to finance the full purchase price of the property by cross collateralizing their other properties. Having the ability to close quickly is often times the difference between the seller accepting an offer or not. Most sellers view a hard money transaction the same as buying “with all cash”



2. Properties that are not stabilized, need work, or are converting to condos. A person makes the purchase of the property with a hard money loan. Shortly thereafter, they apply for a construction loan that will pay off the hard money loan.( usually within 6 months)

3.People with poor credit. With regard to hard money loans, collateral is the most important thing related to the loan. As long as the collateral is sufficient, people with poor credit have a very good chance of getting approved.

Hard money loans are not for everyone, but can be a great bridge to permanent financing. They can give people the opportunity to buy properties that under normal circumstances would not be available because of a number of reasons including timing, the type of property, or their credit. I encourage you to contact us with your loan scenario. You will get a quick response( usually the same day) as to whether your project will be considered.

The HardmoneyDR