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Hard Money Loan Research Paper

740 Words3 Pages

Real estate investors are always looking for capital to make their next investment property purchase. In many cases, they often only have a few days to get the cash they need to make the purchase. They could go to a bank if they have excellent credit and financials, but it can take several weeks to get their hands on the money they need. Understanding how hard money loans work is important for a real estate investor to know so that they can make informed decisions when purchasing their next investment property.

What is a hard money loan?
A hard money loan is a type of mortgage that is primarily used by real estate investors. These types of loans are sometimes referred to as a “loan of last resort” because homeowners who are facing foreclosure …show more content…

Investors should also realize that hard money lenders generally specialize in lending on certain property types. For instance, one lender will only provide loans for single-family residences while another lender will only provide loans on commercial properties. Before the investor becomes a client of a hard money lender, they should know the types of properties they can get a loan for from the lender. Also, these lenders typically do not lend on owner-occupied residences largely because of the legal restrictions that are placed on these types of loans.

What are the advantages of a hard money loan?
A hard money loan may not be the right way to go about investing in real estate for every investor, but hard money loans do have some advantages. These include:

• A simple application process with little examination of income, tax, or bank information
• Fast decisions regarding approvals or disapprovals
• The lender focuses on the profitability of the real estate rather than the borrower’s financial condition
• Credit profile of the borrower is rarely a

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