Hard Money Loans – The Drawbacks

While it’s true that hard money loans can get you money in a hurry and in tough situations, there are admittedly some drawbacks to be aware of. Considering the cons of a hard money loan may help you avoid a costly mistake. Once you become educated, you can avoid the problems associated with ill conceived hard money loans. Following are a few points and realities that may shed some light on the ‘other side’ of hard money loans.


To start with, hard money loans are expensive. Compared to a traditional business loan, expect to pay more in interest rate in exchange for getting your money faster. Simply consider the higher interest rate as the cost you pay for the convenience of speed.


You should also know that extensions can sometimes be harder to get on hard money loans. If you get to the end of your interest term and need an extension, it may be harder to get. In that case, the entire balance of your loan could be due immediately. So it’s safe to say that there are always risks when considering a hard money loan.