Bridge Your Financial Gaps with Hard Money Loans
Quick, asset-secured financing for bridging short-term financial gaps when traditional loans aren't an option.
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Understanding Hard Money Loans
What Is A Hard Money Loan?
A hard money loan uses an asset, such as a home, as collateral for short-term financing. Unlike traditional mortgages, which are issued by banks, these loans are obtained from individual investors or private companies. They provide a faster approval process and can be closed in just a few days, making them advantageous for quick transactions or when traditional loan approval processes are cumbersome or have been denied. This flexibility and speed make hard money loans a preferred choice for borrowers needing swift access to funds secured by real assets.
Flexible Financing Solutions for you
Discover tailored loans to meet your residential construction and property investment needs.
Fix-&-Filip
Construction Loans For Residential Builders
- Construction Loans For Residential Builders
- Get up to $5,000,000
- Interest rate 10 - 13.25%
- Origination fee from 1.875%
- Loan-to-Cost up to 90%
Rent
30-Year Fixed Product For Stabilized Properties
- 30-Year Fixed Product For Stabilized Properties
- Get up to $3,000,000
- Interest rate from 7.5%
- Origination fee 2-3%
- Loan-to-value up to 80%
Ground Up
Funds For Purchase + Rehab Or Refinance + Rehab
- Funds For Purchase + Rehab Or Refinance + Rehab
- Get up to $5,000,000
- Interest rate 10 - 12.75%
- Origination fee 1.875%
- Loan-to-value up to 80%
The Pros And Cons Of Hard Money Loans
The pros of using a hard money loan include
- Faster approval process
- Approval based on property, not credit history
- Flexible loan terms
- Loan-to-Value up to 80%
- Less strict underwriting
- Fix-and-flip properties quickly
The drawbacks of hard money loans include
- High interest rates
- Typically large down payments, upfront fees and closing costs
- Less time to repay because of shorter terms
- Riskier than traditional financing
- Can carry a prepayment penalty
Hard money loans are expensive. Just how expensive? Let’s compare hard money loan interest rates to traditional loan rates.
In August 2023, the average rate on a conventional 30-year fixed-rate mortgage was 7.09%, according to Freddie Mac. Hard money loans have much higher interest rates, typically around 8% – 15%. Hard money loans can also be more expensive depending on the lender’s preferred loan-to-value ratio (LTV). If a lender will only finance 70% – 80% (or less) of a property’s value, you’ll likely need to bring a sizable down payment to the closing table. If you don’t have the cash, you may have a tough time finding a hard money lender to work with you.
The Bottom Line
Hard money loans, a specialized form of financing, find favor among real estate professionals, including investors, developers, and flippers. These loans offer distinct advantages over traditional bank loans: expedited processing times and relatively short terms, typically spanning 6 to 18 months. Investors often seek hard money loans when planning to renovate and resell real estate, using the property itself as collateral. While these loans come with higher costs, their short-term nature aligns with the borrower’s intention to promptly repay the debt.
Understanding Hard Money Lending
Hard money lending operates on a collateral-based model, where the value of the real property takes precedence over the borrower’s creditworthiness or income. Funded by private entities or individual investors, these loans are characterized by their short duration, elevated costs, and inherent risk. While hard money loans can be instrumental in specific real estate scenarios requiring immediate funding, potential borrowers should carefully evaluate their options before applying, considering other available alternatives.
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The Process is Simple, Quick and Painless
- Fill out the survey form
- Please give us 24 hours to get all information organized
- Check your emails for direct messages from your CBA team to schedule an appointment interview to dive into the project details
- We will be in touch within 48 hours with answers, more questions, or a fully executed term sheet
