Do hard money loans require a credit check?

Unlike traditional mortgages, hard money loans have different requirements when compared to home loans. But every lender has different eligibility requirements for approval. Because many hard money lenders don’t require credit checks, they typically rely solely on the value of the collateral securing the loan.

What is a hard money loan?

Like a traditional or secured mortgage, a hard money loan is a secured loan guaranteed by the property it’s being used to purchase. The “hard” part of “hard money” refers to the tangible asset that backs the value of the loan. When a borrower defaults on a secured loan, a lender can take ownership of the asset to recoup losses.

How do hard money loans work?

Hard money loans are usually funded by private lenders or investor groups, rather than banks, and use equity or real property as collateral. How does a hard money loan work? Hard money loans are secured by the property they’re tied to instead of the borrower’s credit and financial profile.