If you compare different loan options and types that are available, you will probably see that a hard money loan is quite different from other types of loans. It is a type of loan used to buy a house, but it is not the same thing as a mortgage loan. What sets a hard money loan apart from other loans is three unique qualities, and here are the three qualities you should know about.

They are easier to qualify for when compared to other types of loans

First of all, have you ever tried to get a traditional type of mortgage loan? If you have, you are probably well aware of the hoops you have to go through to get approved. A mortgage lender checks every detail about you, your finances, and your credit and will only approve the loan if everything checks out. The good news about a hard money loan is that lenders have different criteria for qualifying, and the criteria is much easier to meet. In other words, you will have an easier time getting approved for a hard money loan than you would if you applied for a mortgage loan.  

They cost more than other types of loans

Because hard money loans are easier to qualify for, it is important to know that you might pay more to get one. Lenders that issue hard money loans understand that they are taking on more risks when issuing money to borrowers. To compensate for the extra risk, they will charge higher interest rates for the loans, and they may even charge higher fees. Interest rates are so closely tied to risk levels, so you should always expect to pay a higher rate for a riskier type of loan.

They are due faster than other types of loans

The other key quality of a hard money loan is its time frame. A mortgage is not usually due in full for 30 years. A hard money loan, though, is usually due in a much shorter amount of time. It may be due in one year or five years, but they are always due faster than traditional mortgages.

A hard money loan is ideal for certain situations, such as investing in a rental property or a property to flip. If you have the need for short-term funds, this might be the way to go. Talk to a hard money lender today to find out how to apply for a hard money loan.