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Can Anyone Get a Hard Money Loan?

Short answer – yes. Anyone may get a hard money loan. Hard money loans are a quick, easy way to raise capital when investing in property. As they rely on property collateral, rather than creditworthiness, they can also be a more accessible source of income for borrowers. Potential borrowers must go through private companies or individuals to seek investment, and need to be ready to show the loan-to-value ratio and down payment rate of their property.


Characteristics of a Hard Money Loan:

  • Rates: Since lenders are taking a risk with those seeking to borrow a hard money loan, interest rates are normally higher than conventional loans. This is because the ease as to which a borrower can secure it and the timeline it must be paid off factor into these rates. Each lender has unique requirements.
  • Credit: Since hard money loans rely on collateral, most borrowers will not be as concerned with a borrower’s credit or debt-to-income ratio.
  • Shorter Repayment Periods: Another characteristic of hard money loans is a much shorter window for repayment. Unlike traditional loans, hard money lenders expect payment back within the first few years rather than the extended time frame of conventional loans.


Who May Avoid Hard Money Loans?


Anyone who is worried about paying back higher interest rates in a short period of time should avoid hard money loans. If you do not have a repayment plan that will feasibly repay the lender within a short amount of time, it is important to avoid as to not default on the loan.


Along with this, lenders may do a hard credit pull on your credit score to ascertain whether the borrower can pay back the loan. Hard credit inquiries typically stay on the credit score for two years, while affecting credit for at least a few months. Anyone who does not want to have a hard credit pull may reconsider their hard money loan qualifications.

Who is best suited for a Hard Money Loan?


For those who are looking to turn a quick profit in real estate investment, this loan is for you. The freedom this loan form provides from quick availability and a short-term payment plan are great assets for those who can effectively use this loan. People seeking to flip homes, remodel, and who want to break into real estate may consider this a great opportunity. Along with this, business owners may be interested in this as a possible way to finance commercial properties.


The key to making the most out of a hard money loan is having a repayment plan so the investment is worth it in the long run. Having an exit plan for property remodeling, and being able to pay back the higher interest rates are something borrowers need to be prepared for when looking for a loan. If able to do this successfully, hard money loans may work great in your favor. The successful use of a hard money loan ultimately can build positive credit and begin your real estate portfolio. Furthermore, a hard money loan frees up cash flow so that you can allocate it to whatever expense you may need.

While it is important to be informed when seeking any form of loan, a hard money loan can work in your favor if you are looking to diversify your real estate portfolio and have a plan to repay the loan on your lender’s timeline. Landing a hard money loan may be your next step in a successful real estate portfolio.

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