Hard money loans are essentially a type of asset-based financing in which the borrower acquires funds that are secured by real property. It's called a “hard money” loan because it requires a lower Loan to Value Ratio typically 25% or more down payment required and higher interest rates.
Hard money loans come with similar payment structures as traditional commercial loans, with a much shorter term. They usually come in 12 month terms up to 3 years, with an interest-only payment structure. This means you only need to pay interest costs every month for the entire term.
There are four main types of hard money loans: construction, bridge, rental and commercial. Each type of loan has its own distinct set of benefits.
Fast funding: While closing on a mortgage can take 30 to 60 days, you can usually get a hard money loan in a few days or weeks.
