Hard Money Loans

Hard money loans typically have terms based primarily on the value of the property being used to secure the loan. This is in contrast to most conventional real estate financing that uses the credit worthiness of the borrower. These are common loans in commercial real estate transactions where the lender is a private individual, group of individuals, or private company instead of a bank.

Commercial hard money loans can help to secure financing for a short period of time, although hard money loans do usually come with higher costs and lower LTV ratios. Many property “flippers” use this type of loan to resell renovated real estate.

Primary advantages of hard money loans include confidentiality, faster and easier approval process since the loan is backed by the property and private hard money lenders can make decisions quickly without in-depth knowledge of the borrower’s financial position.