If you apply for a private loan through hard money lenders, expect this short-term loan to be asset-based or secured by real estate investments. It means that to receive the funds, you must put up a property asset as collateral – just like you would in short-term bridge loans. In contrast to traditional lenders like credit unions or banks, these loans get funding from private investors.
These immediate-term financing transactions are primarily used by borrowers needing fast access to funds and often last up to three years. However, the property must be in poor condition and in some state of disarray in order for hard money lenders to approve your application. For this reason, these lenders are typically private investors or companies.
When you apply for a loan from a hard money lender, you can expect a quick turnaround. Compared to traditional loans, you can get approved faster – especially considering that you won’t get a mortgage on distressed properties through commercial banks. What the private lender will primarily consider is the collateral you put up, with the emphasis on your employment and the financial situation only secondary.
With hard money loans, you’ll have flexible terms and won’t have to undergo in-depth evaluations of your credit report or bank statements.
In this video, Bridger Pennington explores how hard money loans work and the benefits you can get from these private loan programs.