What is a hard money loan? It's an asset-based loan that is typically given to people with poor credit. They are not your typical loans for the average person; they are usually designed for real estate investors, business owners, and other high net worth individuals. If you're in need of some cash but don't have enough assets or collateral to secure a traditional bank loan, then hard money might be the right choice for you!

In a traditional loan, the borrower will have to put up collateral in order to receive money. With a hard money loan, you don't need to secure your assets but rather the value of what you're trying to buy with it. For example, if someone wanted $100k for their real estate deal and had bad credit, they would probably not qualify for a traditional loan. However, they might be able to get $100k in hard money with the real estate deal as collateral!

A hard money loan is usually short-term and has a high interest rate. Interest rates typically range from 12% to 18%, which may be much higher than what you would pay on other types of loans. The term length can vary; however, the average time frame for these loans are about six months with some lasting up to two years or more.

The interest rates and term length might seem a little too high for most people, but they do offer some benefits that traditional loans cannot provide:

- Ability to buy in areas where banks won't lend due to poor credit or lack of collateral.

- Quicker access to funds than with other types of conventional financing - usually within a few days.

- You can use the funds for almost any type of real estate purchase, rehab project, or development deal you have in mind!

The borrower will need to pay back both interest and some principal at certain points during the loan term. When it's time to repay your hard money lender, they will usually request that all the funds be sent back to them at once. You will then receive a notice for the amount of time you have until your repayment is due and must pay it before that date or risk further consequences!

Hard money loans can also sometimes come with fees, such as:

- Origination fee - this allows the lender to take upfront costs and fees for making the loan.

- Prepayment penalty fee - this is a cost that may be assessed if you pay off your loan before it's due date or prepay some of the principal.

What are hard money lenders looking for?

Hard money lenders typically look at three main areas when choosing who to give their funds to: creditworthiness, debt-to-income ratio, and overall ability to repay. You will need a good credit score in order to get approved for a hard money loan; however, because this is an asset-based loan it can be easier than traditional financing options if you don't have perfect credit. Typically the higher your income or assets are, the more likely you will be to get approved for a hard money loan.

Do I have any other options besides hard money loans?

Depending on what you need your funds for and how soon you'll receive it, hard money may not always be the best solution. It's usually meant as a short-term fix so if that isn't something that is feasible for you, then this may not be the best option.

If you want to purchase a house with poor credit or lack of cash assets, there are other options like home equity loans and second mortgages that can provide funding quickly! If your goal is simply business expansion or another type of investment deal where money is needed in less than six months, then hard money loans may be a great option for you.

While hard money loans can provide quick cash to those who don't qualify for other options, they aren't the best choice in all situations and often come with high interest rates and fees that will need to be paid back as well! This type of loan should only be used when it's absolutely necessary and not for regular business or personal use.

To pre-qualify for a hard money loan today, simply click the "Prequalify Today" button on our home page, or call 347-696-0192 to speak to a real person and determine if a hard money loan is a good fit for your next project!