Why would anyone seek a Hard Money loan when traditional lending sources charge lower interest rates and loan fees?
There are many reasons why a borrower would choose to use a Private or Hard Money loan over less expensive traditional lender financing. Speed of funding is the most common reason. Institutional lenders can take more than 30-45 days (residential), 90-120 days (commercial), and 180 days (development, construction) to fund a loan. Hard Money loans can fund as quickly as 24 hours under certain conditions, but typically fund within two weeks. Property type is another common reason for utilizing a Hard Money loan. For example, banks are unable to make most types of raw land loans, so Hard Money loans are practically the exclusive source of financing for raw land. Hard Money loans can allow certain borrowers or properties that don’t initially meet conventional lender guidelines to be brought into compliance with these financing guidelines, or eventually sold. Hard Money financing is often used for acquisitions, development, turnaround situations, foreclosure bailouts, and bankruptcies; and f
