Distinguishing Characteristics

A hard money loan is easily recognized by some distinguishing characteristics, most notably its ability to close quickly. Although a hard money loan typically carries a lower loan to value and more costly rates and fees, borrowers continually turn to this unique loan because most times it can move from start to close in 30 short days.

Loans often times must close quickly for any number of reasons. Sometimes the timing is a requirement to take advantage of a good price on a commercial property. Other times borrowers must meet fast closing dates in order to avoid foreclosure. Regardless of the reason, hard money is a viable and valuable loan type.

It's also important for brokers to understand that a typical hard money loan does not have a pre-payment penalty associated with it. So, if the borrower is in a position to repay the loan early the lender will not impose an extra fee.