What is a Hard Money Loan and How Do They Work?

A hard money loan is a type of loan secured by real estate. The main difference between these loans and conventional loans is that they are funded by private investors instead of a bank or credit unions. If you have questions about how a hard money loan works, read on to discover what exactly these loans are, what they can be used for, and how they work.

An Intro to Hard Money

In most cases, hard money loans carry terms for approximately a year, but these transactions can still be extended for up to five years in many cases. Consumers must usually make monthly payments on the interest as well as some of the principal. At the end of the loan term, they are required to make a balloon payment.

How much lenders are willing to provide an applicant depends on the value of the subject property. The property can either be one the applicant is in the process of acquiring or one the applicant already owns.

Situations That Can Benefit from Private Money Lenders Los Angeles

Hard money loans can be used as a beneficial form of financing in many situations. These include some of the following:

  • Home flipping
  • Construction loans
  • Land loans
  • Situations when the applicant has credit issues
  • When a real estate investor needs to move quickly with funding

While investors may choose a hard money loan for many different reasons, most acquire these loans to obtain funding quickly. In many situations, funding can be acquired within a week or less.

Get Started Today

When you type “private money lenders near me” into your browser, your search results may produce a long list of options. If you are currently looking for California bridge loan lenders, take a look to find out more about hard money loans and how they work.

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