Marc Darrow, MD. JD
How Does a Hard Money Loan Work For You?
A hard money loan is a way for you to borrow money for real estate without using traditional mortgage lenders. Instead, the funds come from individuals or investors who lend money based primarily on the property you’re using as collateral.
Hard Money Loan vs Traditional Mortgage
Traditional mortgage loans require proof that you can comfortably repay the debt. Lenders often review your credit scores and any income available to evaluate your creditworthiness. If you have plenty of income, savings, or can get another collateralized loan you might not need to worry.
Loans for low credit scores
The traditional mortgage process becomes more challenging if you have a low credit score, an income source that is difficult to verify to your lender’s satisfaction, or a high debt-to-income ratio.
Hard money lenders are primarily concerned with the value of the collateral securing the loan. They are less concerned with your credit scores and income than traditional residential mortgage lenders.