Is a Hard Money Loan a Good Idea?

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Hard money loans are secured loans against real estate properties when one cannot qualify for a traditional loan from a bank. These are short-term loans—typically to be paid off within a year or two—and often do not involve any rigorous underwriting associated with the traditional banking system.

You can qualify for a hard money loan even if you have a mediocre credit score because hard money lenders have the property as collateral until the loan is paid off.

When Should You Opt for Hard Money Loans?

There are several perks of getting a hard money loan if you want to invest in real estate, but like all good things, there are some other factors you need to consider before opting for a hard money loan.

Before acting on the idea of getting a hard money loan, you should carefully inspect the circumstances surrounding the real estate deal you want to close and your current financial situation.

  • Hard money loans are a good idea when you consider investing in a real estate property that you are sure you will be able to pay off within the next couple of years.
  • If you are sure that your present income will help you meet the monthly payments, even if the interest rates are higher than traditional loans, because you will reap the profits in the long run when you have cleared the payments.
  • If the property you are seeking is in high demand and you know by the time the bank clears you for a loan that you will risk losing the property to another buyer.
  • If you are buying an old house at a lower price, it will not require a very large down payment, and you are sure to sell it at a higher price after refurbishing it. That way, you will receive ample profit even after you have paid off the hard money loan with interest.

However, before approaching the hard money lender, private lenders, or other for-profit financial institutions, you should have a clear idea of your finances.

  • Make sure you can keep up with the monthly payments so that you do not risk losing your collateral, which is the property for which you have taken the loan.
  • If you are approaching a hard money lender because you have a low credit score, you must keep working on improving your credit score, even if the lender agrees to give you the loan. A good credit score will help you build a firm financial foundation later.
  • Be mindful of the lender’s reputation. As they have a less rigorous underwriting procedure, you might be tempted to work with the first lender who agrees to sanction your loan.
  • You should still make sure that they are a legal organization, and you can also compare the interest rates of different hard money lenders so that you do not have to pay more than you should.


At Hard Money Georgia, we specialize in providing loans against property value to those who might not get approved by the bank. While banks check several criteria like credit report, income-to-debt ratio. and tax returns of the borrower before approving the loan, our only concern is to check if the loan amount we are providing matches the property price for which the loan is issued.

We close deals and lightning-fast speeds, enabling our clients to purchase their coveted property without going through rigorous documentation.

If you are also looking for fast funding, contact us today, and close the deal on your desired property in a few days.