Commercial Real Estate Advisor

Timeline for a Hard Money Loan and What You Can Do to Help the Process

Have you wondered just how long it can take to get a hard money loan?  In this blog, we will review the timing and how you can help speed up the process.  Let’s begin first with understanding a hard money loan.

What’s a Hard Money Loan?

A hard money loan is a loan secured by a physical asset, in the form of real property. These are short-term loans, and they are funded by private investors instead of conventional sources (banks, insurance companies, etc.). The term of a hard-money loan can last anywhere from one year to five years, and payments are made in monthly installments of the interest on the loan.

Since the hard money loan is secured by real property, the amount of money lent to the borrower by a private investor is almost entirely dependent on the value of the property.

What is the Timeline to Get a Hard Money Loan?

 One very attractive element of a hard money loan is how quickly you can get the funds you need vs. a traditional lender.  In most cases, you can get your deal funded within a couple of weeks.  If you have your paper work in order, you may be able to expedite the process even further.

Below, we’ll break down the process of taking out a hard money loan into simple steps:

Step 1: Find the Right Lender

 By doing some research asking around, reading reviews, looking at websites, you can develop a list of lenders to contact. Then when speaking to them, it’s okay to ask them questions, like:

  • Are you a direct lender?
  • What information do you need to provide a quote?
  • What lending options do you provide, i.e. LTV, interest rates, length or loan, etc?
  • How long have you been lending?

You can also read more on finding a hard money lender here.

Step 2: Know What the Equity in the Property is.

 Any lender’s main concern is the collateral being offered for the loan. This is doubly-so for a hard money lender. Most lenders have a maximum LTV ratio that they will be willing to lend up to, so knowing the approximate value of the property and the LTV ratio of your loan request is very important.

 Step 2: Prepare and Present the Property

The more detailed the information is that you provide to the Lender, the quicker they will be able to not only get you terms, but also perform their due diligence and underwriting. When applying for a hard money loan, borrowers should present a detailed summary of the property, including a rent roll, the size of the property, the tenant mix (retail, office, residential, etc.), and even some history of the property, if they know it. The more detailed the information, the better the chance to get the loan you are looking for and the quicker the loan can close.

Step 4: Close on the Loan

A hard money loan request will take anywhere from a few days to a few weeks, which is much quicker than the process with a bank loan. That is why it is favored by those looking for an expedited process. The more detail that is included in the application for a hard money loan, the likelier it is that the request will be quickly and efficiently approved.

H&O Capital Funding has helped countless real estate buyers, sellers, lessees and lessors achieve their goals. Our legacy is unwavering commitment to the communities we serve. Houlihan & O’Malley Commercial Real Estate Services specializes in four distinct, yet overlapping, areas of business: Commercial Brokerage services, Private Mortgage services, Appraisal Services and Advisory services.

For more information on loans that we offer, visit our website.


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