Installment Loan Pointing to Paperwork with Ink Pen in Hand

Need Housing Help? Here are a few resources to help you cover your mortgage, rental assistance, or utilities. Find COVID-19 mortgage and housing assistance here.


When financing through a bank is not an option, hard money loans are a good alternative. Considering a hard money loan is a multi-tiered process. And like with all kinds of loans, there are requirements and risks to know about before considering getting started with one. Since hard money loans are a little different from traditional bank or credit union loans, it’s important to know the key discrepancies in order to make the wisest decision for your loan.

What exactly is a hard money loan?

Hard money loans are privately-funded loans secured by real estate. Contrary to loans provided by conventional lenders, hard money loan amounts are based on the value of the subject property. The term usually lasts about 12 months, but can be extended for a couple of years, with required monthly interest payments. Since hard money loans are primarily concerned with the property’s value, borrowers can still have a chance of being approved despite a foreclosure or short sale if they have sufficient equity in their collateral property.

Who should consider hard money loans?

Real estate developers and house flippers usually use hard money loans when they plan on renovating a property and reselling it for profit. An investor who’s been rejected a loan by a bank, whether because of insufficient income history, foreclosures, credit issues or other concerns will opt for a hard money loan, which brings us to the next question.

What are the requirements for hard money loans?

Almost any type of property can suffice to receive a hard money loan, including multi or single-family residential’s, land, industrial and commercial.  Credit score isn’t much of a concern for the lenders,  so long as the buyer has the capital to pay off the interest. Lenders focus on the “after repair value,” or ARV, when considering whether to make the loan. This is an estimate of what the property’s value will be after it’s been renovated or repaired.

What are the risks in hard money loans?

With every loan there comes a risk. Since hard money lenders actually take on more risk than conventional lenders, there is also more risk on the buyer’s side. Interest rate is one of these, with the average rates rating from 12 – 18% depending on the lender and region, roughly 10% higher than conventional loans. Since hard money loans are so convenient, their origination and loan-servicing fees, along with closing costs are likely to be higher as well. Hard money loans also feature much shorter repayment periods, which is why it’s important to make an accurate estimate for how long it’ll take the property to become profitable.

What are the benefits in using hard money loans?

Hard money loans are sometimes referred to as “last-resort” loans. This is because they almost completely eliminate the massive time consumption that comes with applying for a regular mortgage. Contrary to conventional loans, which can take months to close on and puts investors at risk, hard money loans can be funded within a week and the application process generally takes a day or two. This is especially convenient for investors who are trying to acquire a property with several competing bids. Hard money loans are also more flexible than conventional ones. Since they’re provided by private lenders, borrowers can often tailor the terms to their needs, such as the repayment schedule and other fees.

The last word

If you’re a real estate investor who’s trying to get a seller’s attention and set their offer apart on a property with many competing bids, hard money is the way to go. By making sure you have the equity to pay the interest rates, making an accurate estimate of your property’s ARV and working with a reputable hard money lender, you’ll be fully equipped to fund your real estate deals with a hard money loan.

10 Payday Loan Benefits and How They Can Work For You

Read More

What are the Advantages to Working With a Direct Lender?

Read More

About Check Into Cash

Check Into Cash specializes in small-loan lending with Payday, Installment, Title Loans, and more, depending on your state.

It’s Quick, Easy & Confidential®  to get the cash you need today. We reach over 25 states with more than 650 store locations and easy online lending, too.

Popular Articles

How To Get Water Turned Back on After a Shut Off

Read More

Can't Afford Childcare? Here are 9 Tips for Working Parents

Read More

Jobs That Pay You Cash the Same Day You Work

Read More

CIC on Facebook

2 days ago

Check Into Cash
🍬 Better Than Candy: Our Sweet Treat GiveawaySkip the tricks and go straight for the treats. Get your daily entry in now. This giveaway lasts until October 31, 2021.Enter here: mycic.us/Oct-giveaway(Restrictions apply; see rules for details.) ... See MoreSee Less
View Post on Facebook

4 days ago

Check Into Cash
The Brighter, The Better 🕯To help your pumpkin shine brightly, line the inside of your jack-o-lantern with foil. This will help reflect light from the candle inside. ... See MoreSee Less
View Post on Facebook

1 week ago

Check Into Cash
Nothing Spooky About Our Sweet Treat Giveaway 🍭Our Sweet Treat Giveaway will surprise FIVE lucky winners $300 each. Enter our Sweet Treat Giveaway daily until October 31.Visit mycic.us/Oct-giveaway to enter every day.(Restrictions apply; see rules for details.) ... See MoreSee Less
View Post on Facebook

The information provided on this website does not, and is not intended to, constitute legal or financial advice. Rather, all information, content, and materials available on this site are only meant for general informational purposes. Information on this website may not include the most up-to-date legal, financial or other information. This website contains links to other third-party websites. Such links are only for the convenience of the reader, user or browser. We do not recommend or endorse the contents of the third-party sites nor are the owners of such third-party sites recommending or endorsing our services. Check Into Cash is not affiliated with nor endorsed by any of the websites, companies or entities mentioned in this blog. See a licensed attorney for legal advice and see a certified public accountant or financial planner for financial advice. No reader, user, or browser of this site should act or refrain from acting on the basis of information on this site without first seeking professional advice. All liability with respect to actions taken or not taken based on the contents of this site are hereby expressly disclaimed. The content on this posting is provided “as is,” and no representations are made that the content is error-free.