Definition
A short-term loan secured by real estate, often used when traditional financing isn’t available. They usually come with higher interest rates.
What to consider
- Only consider these loans as a last resort due to high rates.
- Plan to repay them quickly to avoid extra costs.
- Understand the risks before using your property as collateral.
Real world scenarios
- Victoria, a house flipper, relies on a hard money loan for quick funding to purchase a distressed property, planning to renovate and sell fast.
- Leon must accept steeper interest rates on a hard money loan but values the expedited approval process for his real estate project.
- Realizing the loan fees are high, Terrence lines up a refinance plan so he can repay the hard money lender promptly.
Related terms
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