What Is a Hard Money Loan How a Hard Money Loan Works
                     What Is a Hard 
Money Loan? How a 
Hard Money Loan 
Works
www.acalending.com
What Is Hard Money Lending
Money lenders come in a variety 
of shapes and capacities & sizes. 
To comprehend “what is a hard 
money lender,” you must first 
understand the question “what is 
hard money lending.” It’s nothing 
more than a short-term asset-
based loan backed by property 
as collateral, funded by 
alternative sources to more 
conventional financing. Hard 
money lending is essentially a 
non-traditional loan secured by 
real property. It seems to be 
asset-based financing in which 
the borrower obtains the funds 
that are secured by real property. 
They have been considered the 
loans of “last resort” but these 
days they have many uses, with 
one being short-term bridge 
loans primarily used in real 
estate transactions.
Why would a potential borrower choose a hard money loan from a hard money 
lender over a standard bank loan? It is suitable for a run down property that could 
be fixed and flipped or land acquisition or renovation work. In these situations, 
banks may not even lend on the property due to condition (or land, they may not 
lend on at all). Instead, they take out a hard money loan to purchase or refurbish 
the property, intending to repay it within a few months or years. California hard 
money lending is useful for builders to buy a lot, construct it, and then sell the 
new real estate to repay the debt fast. Utilizing hard money allows investors to 
leverage the capital they have on hand and take advantage of opportunities in 
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Hard money loans are issued based on the value of the collateral property. The 
creditworthiness of the borrower is not typically a major concern for hard money 
lenders. When it comes to real estate ventures, hard money loans are often less 
of a problem than standard lenders. The approval process is the most significant 
advantage of relying on reputed hard money lending in California. It tends to be 
much quicker than applying for a mortgage or other traditional bank loans. 
Leading California hard money lending keeps focusing on collateral rather than 
the applicant’s financial position. It is suitable for borrowers with poor credit 
positions but who have substantial equity in their property. It can also be suitable 
for borrowers unable or unwilling to document their income to the degree that the 
banks require. For a W-2 employee this may not seem like a major hurdle, but for 
self employed individuals with multiple streams of income this can be substantial.
Borrowers often pay a higher interest rate on a hard money loan than on a 
standard bank loan or through government lending programs. As a result, hard 
money lending in California takes a higher risk while offering asset-based funding. 
However, the increased expense gets nullified due to its faster access, less 
stringent approval process, and potential flexibility in the funding or refunding 
schedule. Additionally, these loans are usually interest only, so the payment 
difference is not as great as it may seem when comparing to a fully amortized loan 
at a lower rate.
Hard money loans may be sought after by property flippers who plan to renovate 
& resell or develop the real estate property used as collateral for the financing. 
The higher interest rate & debt to equity ratio of a hard money loan insists the 
borrower pay off the loan quickly. Hard money lending in California isn’t as 
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Ldeenfdauinlgts .as they are one of the many legitimate hard money lenders in California. 
They will always work on your behalf to help fund quickly, enabling you to buy real 
estate before it slips away!