What is a Hard Money Loan?

Hard money loans fill a void traditional loans can’t. They typically last just a few months or a few years.  Not 15 or 30 years of a regular mortgage. You can get the money quickly, perhaps a week, because they are asset based (on the real estate) not borrower based – your credit score may not even be considered. They don’t have to follow mandated guidelines and qualification processes so most of the qualifying you would normally go through is bypassed. 

These are high interest loans too. Maybe double what you can get elsewhere. There is much more risk with hard money loans so there has to be an upside (higher rate) for the lender.  Who provides it? Often, it is an individual or perhaps a company that originates this loan – not a bank or mortgage lender like you are used to. So, if you are an investor looking to buy a home for a quick flip and need money fast this might make sense.  Otherwise, the high interest rates make traditional options a better choice.