Grand Funding FAQ’s on Hard Money

Q: What is a hard money loan?

A: A hard money loan is a type of financing secured by the value of a property rather than the borrower's credit score. These loans are usually provided by private lenders and have higher interest rates compared to traditional loans.

Q: How do hard money loans work?

A: Hard money loans work by using the property as collateral for the loan. The lender evaluates the value of the property to determine the loan amount and interest rate. Borrowers with lower credit scores can still qualify for a hard money loan.

Q: What are the pros and cons of hard money loans?

A: The pros of hard money loans include quick approval, flexibility in terms, and accessibility for borrowers with bad credit. However, the cons may include higher interest rates and shorter loan terms compared to traditional loans.

Q: How can I find a hard money lender?

A: You can find hard money lenders by searching online, attending real estate networking events, or asking for referrals from real estate professionals. It's important to research and compare different lenders to find the best fit for your financing needs.

Q: What is the loan term for a hard money loan?

A: A hard money loan is typically a short-term loan, usually ranging from six months to a few years. The exact loan term will depend on the lender's terms and the specific agreement between the borrower and lender.

Q: How are hard money loans different from traditional loans?

A: Hard money loans are different from traditional loans in terms of approval criteria, funding speed, and terms. Traditional lenders focus on the borrower's credit score, while hard money lenders prioritize the value of the property being used as collateral.

Q: What is the interest rate on a hard money loan?

A: The interest rates on hard money loans are typically higher than those of traditional loans due to the higher risk involved for the lender. These rates can vary but are usually in the range of 7% to 15% or higher.

Q: When should I consider using a hard money loan?

A: You should consider using a hard money loan when you need quick financing for a real estate investment, have a project that traditional lenders don't fund, or have a lower credit score that may not qualify for a conventional loan. Hard money loans can be a good option for short-term financing needs.