Hard Money Loans: Who Should Apply

Hard money loans have been categorized as the "last resort" loan for borrowers in specialized or restrictive financial circumstances. Hard money loans are issued by a private lender and secured by the current sale value of the equity portion of real estate of an individual or business.  

Hard Money Loans:  Who Should Apply


Typically, hard money loans borrowers are those who find it difficult to qualify for a traditional loan from a commercial banking institution. For example, hard money loans are frequently sought by property owners who need a quick supply of funds to avoid foreclosure.

However, as hard money loans have become more popular, the range of hard money borrowers has become more diversified. For example, if somebody wants to purchase undeveloped property they may apply for a hard money loan and avoid the resistance from commercial banks, who prefer property value to derive from buildings.  Commercial banks are also reluctant to issue loans for the purchase of remote or rural property, and borrowers looking to purchase a ranch or other land-based revenue property can get the funds they need from a hard money loan.

Hard money loans have also become a useful option for investors who need to move swiftly to take advantage of an investment opportunity. The process of applying for a loan from a commercial bank can take several weeks, involving documentation and red tape, and the investor could lose out. Hard money loans can be obtained much faster, and an investor can put the cash into turnaround quickly.

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