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With hard money loans, the lender approves a borrower based on the value of the property being purchased. The lender may do a quick check of your credit or finances, but in general, the process will be much less rigorous than with a traditional loan.

24 Questions to Ask a Hard Money Lender What is your real estate license ID? What types of loans (e.g. bridge loans, construction loans, conventional) do you offer? Do you fund renovations? ... What size loans do you normally offer? How long of a loan term is available? What are your net worth requirements?

Here's how a buyer can make a cash offer using a hard money loan in 3 easy steps: Get pre approved by a hard money lender. Identify the property you want to purchase. Submit your offer to purchase and write on the offer, “cash and hard money.” There is no financing or appraisal deadline.

No minimum credit requirement: Hard money lenders tend to rely solely on the value of the collateral securing the loan and don't take the borrower's credit score into account. Quick closing time: Rather than the loan closing process taking weeks and weeks, hard money loans generally close in a few days.

Hard money loans come with similar payment structure as traditional commercial loans, albeit 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.

Hard money loans can be a useful tool if you need financing through a less traditional route. However, these loans come with high rates and a significant amount of risk if your investment isn't as successful as you hope.

How to Negotiate With Your Hard Money Lender Know how hard money works. Hard money loans require a tangible asset to secure the loan (i.e., act as collateral). ... Know where the funds come from. Private lenders fund loans with their own capital. ... Research your lender. ... Prove your project's value. ... Have an exit strategy.

A hard money loan is simply a short-term loan secured by real estate. They are funded by private investors (or a fund of investors) as opposed to conventional lenders such as banks or credit unions. The terms are usually around 12 months, but the loan term can be extended to longer terms of 2-5 years.