What are the pros and cons of hard money mortgage loans?

Getting a traditional mortgage can be tricky if you have plans to purchase a house to flip or as a rental property. If your credit score doesn’t meet traditional lenders’ criteria, or you need money sooner than a lender can provide, you could be down on luck. If you’re in that situation, you might consider applying for a hard money loan with Accelerated Lending Group.

Contact our mortgage experts if you want to know more about private money lending in real estate.

What is a Hard Money Mortgage Loan?

A hard money mortgage loan is a type of secured loan primarily used to purchase hard assets — typically real estate. Hard money loans don’t come from traditional lenders like banks but from individual investors, financing companies, and investing groups.  The alternative lenders don’t base their decisions on the borrower’s creditworthiness; instead, they base their decision on the property to be collateralized. 

Hard money mortgage comes with risk and are not meant for all real estate transactions, which is why it’s important to understand how they work before applying for hard money mortgage in Bakersfield, CA.

Pros of Hard Money Loans

Hard money loans are typically perceived as loans used by investors with poor credit histories. While this isn’t always true, you can use a hard money loan whether you have a good credit score or not. The benefits of this type of loan are listed down below:

  • Hard money loans typically close faster compared to traditional loans. There are fewer requirements for getting a hard money loan approved than traditional loans. 

  • Lenders overlook poor credit history. That’s because hard money lenders don’t have to follow the same regulations traditional lenders follow.

  •  May be easier to obtain than conventional loans to buy investment properties.

Cons of Hard Money Loans

Now that you know the benefits of hard money loans, we’ll look at their drawbacks. The cons include:

  • Higher interest rates. Lenders usually charge a higher interest rate because they’re taking more risk by lending on a distressed property.

  • You may need a larger down payment to qualify for a hard money loan.

  • Hard money loans have shorter terms than what’s offered on conventional loans. 

Bottom Line

If you need financing through a less traditional route, then hard money mortgage loans are a perfect fit for you.

Ready to start a real estate business? Contact us for more information on hard money mortgages with Accelerated Lending Group and begin your journey.


* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.

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