Trust Stone Capital
Gary A. Pryde
Broker #01059329

A hard money loan is a short-term loan secured by real estate, often used for real estate transactions such as property flips or renovations. The loan is typically provided by private lenders or investment groups rather than traditional banks.

Hard money loans are primarily based on the value of the property, rather than the borrower’s credit score or financial history. They are faster to secure but come with higher interest rates and shorter terms than traditional loans.

Hard money loans usually range from 6 months to 3 years, with interest rates between 8-15%. Loan-to-value (LTV) ratios typically range from 60% to 65% of the property's after-repair value (ARV).

Hard money loans can be processed quickly, often in as little as 7-10 business days, depending on the lender’s processes and the complexity of the deal.

The costs associated with hard money loans include higher interest rates, origination fees (1-5% of the loan amount), appraisal fees, closing costs, and sometimes a “points” fee (a percentage of the loan amount charged upfront).

Hard money loans are most commonly used for residential and commercial properties, especially for fix-and-flip projects, land purchases, or construction loans. However, the property type and condition will affect approval.

Qualification depends largely on the value of the property and the borrower’s equity in it. Lenders typically focus on the property’s potential value after repairs or improvements (ARV) rather than the borrower’s creditworthiness.

If you fail to repay the loan, the lender may foreclose on the property to recover their investment. However, this is a last resort, and many lenders will work with borrowers to avoid this outcome.