A hard money loan is a special kind of loan in which funds are secured by real estate instead of the homeowner’s credit history and debt to income ratio.

Comparable to a bridge loan, hard money lenders mainly focus on real estate and these lenders can be an individual or private money lenders, as banks or credit unions do not typically offer these types of programs. These hard money equity loans normally last 12 – 60 months and are frequently utilized as a method to get quick cash.

You might look into hard money equity loans if you desire to purchase a brand-new home however your present home has not yet sold and is stalling on the market, a hard money bridge loan might be a method to tap into your home’s equity and use those funds as a deposit or down payment on your new home. Other typical uses for hard money loans consist of purchasing an investment property or injecting money into your small business with a hard money mortgage for self employed.

The most significant difference between hard money loans and other kinds of mortgage loans, such as conventional loans, is your home is used as collateral and the hard money lender is more interested in equity, condition and location of the subject property. Borrowers with a challenging credit report will have a much easier time being approved with hard money loans for bad credit, as their credit scores are not a big part of the underwriting equation. When you need money fast, hard money loans require less paperwork and their approval process is much more streamlined, allowing for quick access to your real estate equity for quick money.