Pros & Cons of a Hard Money Loan

Hannah PattenUncategorized

In our last blog post, we discussed what exactly a hard money loan is and how it works.

Today we will discuss the pros and cons of a hard money loan. When it comes to choosing a loan you should always do your in-depth research but our team has developed an awesome list of pros and cons if you are considering a hard money loan. So let’s jump right in:


To start, hard money loans aren’t a perfect solution- we will be the first to say that because there are two major drawbacks: 

Hard money loans are convenient but investors pay a price for borrowing this way. The rate you pay can be up to 10 percentage points higher than for a conventional loan. There are a lot of fees that come into play as well such as loan-servicing fees, and closing costs typically cost more to investors such as yourself. 

The purpose of a hard money loan is to allow an investor to get a property ready to go on the market as fast as possible but it is important to remember that these loans feature a much shorter repayment time than traditional mortgages. When choosing a hard money lender, such as Capital Funding Financial, it is crucial to have a clear idea of how soon the property will become profitable to ensure you will be able to repay that loan promptly. 

On the other hand, there are a lot of strong reasons why you should consider getting a hard money loan instead of a mortgage from a bank. Our team has developed a list of pros that will surely help you out in your decision making. 


Applying for a mortgage is confusing, time-consuming, and can take months to close on a loan which puts investors at risk of losing out on a particular investment property. With an investment loan, it’s possible to get funding within a matter of weeks, making your dreams come true.

Since our hard money loans are offered by private lenders can have more room for negotiation in the long term. You might be able to negotiate certain fees or the repayment schedule, every lender has their preferences but it doesn’t hurt to try.

With a typical hard money loan, the property itself usually serves as collateral for the loan. But, on the other hand, lenders may allow investors a bit of leeway here- for example, you may secure the loan using personal assets. Every lender has different preferences that are why it is important to find the hard money lender that works for you!

 So what is the bottom line? Hard money loans are a good fit for investors who need to get funding for an investment property fast, without any of the annoying red tapes you encounter when working with a bank. When you research lenders for hard money loans pay close attention to the fees, interest rates, and loan terms. 

For more tips and information on hard money, loans check out the rest of our informative blog posts!