Hard Money Loan Basics for Beginners

Discover how you can receive the funding you need for an investment property, home down payment or fix-and-flip investment opportunity. Hard money loans are a flexible option for individuals looking to invest in real estate, so search for local private money lenders for real estate to find leading loans for your personal situation. Find answers to common questions about this type of loan today.

What Is a Hard Money Loan?

The key features of hard money loans are that they are short term, flexible and backed by real estate. Most hard money loans are designed to give you the working capital you need to purchase real estate, make necessary improvements or prepare to flip a property.

Because of this, hard money loans are typically short term. In most cases, you should plan on repaying your loan in a year. These loans can be extended, so you may be able to extend the payment schedule over a few years. This time frame is designed to give you plenty of time to renovate and refinance or sell a property.

Another key feature of hard money loans is that they are incredibly flexible and easy to receive. Unlike a strict mortgage or bank loan, you don’t typically need a high credit score. If you’ve been denied a loan due to your credit score or other reason, you may still qualify for a hard money loan. It’s essential to compare hard money real estate lenders in your area, as interest rates and terms can vary.

The interest rates of these loans are usually higher than comparative bank loans. However, the short term limit means you won’t accrue as much interest. A high interest rate will cost you a significant amount over the course of a 15-year loan, but a one-year loan can still be very affordable. Discuss payment plans, interest rates and more with a local agent to see how you can get the most out of your hard money loan.

Why Should I Choose This Loan Type?

A hard money loan gives you a very flexible option if you’ve been denied other loan options. Don’t let a bank hold you back from your dream property or investment opportunity. A hard money loan is based more on the property itself than on your personal credit history, so a temporarily low score won’t affect your application.

Hard money loans are incredibly flexible. Use a loan for the down payment and repair costs for a fix-and-flip property. Traditional mortgages aren’t capable of covering improvement costs, but a hard money loan is yours to use how you wish to make the most of your real estate investment strategy.

Where Can I Apply for a Loan?

Apply today to the best hard money lenders in California to see if you qualify for a loan for your real estate transaction. Whether you’re looking for a few thousand or a few million, work with a local leader in hard money loans in California. Execute your investment strategy to secure a property, renovate a property or sell a property in a great neighborhood with the help of a flexible, competitive loan.

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