How do hard money loans work ?

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Hard money loan

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 is a type of loan that is secured by real property

Hard money loan

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 is generally a short-term loan for improving, refinancing, and reselling real estate properties

Hard money loan is Used for

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real estate investment transactions, with the lender being private investors and not banks or commercial lending institutions.

How does it work?

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Individuals, investment firms, and other private entities typically provide these loans to real estate investors. 

1. Collateral

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Real estate is the most typical type of collateral for a hard money loan.

2. Credit

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creditworthiness of the borrower is rarely considered.

3. LTV Ratio

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 while some lenders require the applicant to put down at least 10% of the loan amount or a 90% LTV loan, most lenders require 70% or more LTV. 

LTV = Loan to Value

3. Underwriting 

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A hard money loan requires underwriting based on specific funding criteria and funding is normally provided a few days after underwriting approval.

Used By:

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Hard money loans are widely used by real estate dealers and investors who buy, repair, and resell properties in a short amount of time.

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