When looking for a hard money lender in Pennsylvania, compare their reputation, location, and loan terms.  It makes sence to work with a local or regional company that knows your market.   Referrals from other investors are a great way to find hard money lenders or private lenders.   Most lenders attend real estate investor groups and Meetup groups.  Mortgage Brokers work with direct lenders or you can ask Real Estate Agents, and Title Companies.  Finally, you can search for ‘hard money lenders near me’ online.   Make sure to check their online reviews and if they are local.  Most hard money lenders are actively involved in helping real estate investors succeed by providing content on youtube, social media or through podcasts.

Getting a hard money loan in Pennsylvania is relatively easy compared to traditional financing since the approval process is based more on the property’s value or viability of the overall project rather than credit and income history.  Most lenders will require down payment funds, a clear repayment or exit strategy to repay the loan, and typically have a higher interest rates than a bank (e.g., 12-14%).  The approval process and overall transaction are usually much faster than a bank (ex.. a few days instead of a few weeks)

Depending on your overall project a hard money lender is usually worth using if there is enough profit margin.  Hard money lenders offer quick and flexible terms to purchase a property quickly compared to a bank or instituational backed lender.  They require fewer documents and are not credit driven.  However, they often come with higher interest rates, short repayment periods, and additional fees. Whether they are worth it depends on your situation, time frame, credit score and ability to manage the loan’s terms effectively.

A good interest rate for a hard money loan typically falls between 10% and 16%, though rates can vary based on the lender, loan-to-value (LTV) ratio, borrower experience and credit score. Points (upfront fees) usually range from 2% to 6% of the loan amount. While hard money loans have higher rates than traditional mortgages, securing a lower rate depends on other qualification factors including lower LTV ratios.

Hard money lenders require a down payment, typically ranging from 10% to 30% of the property’s purchase price. The exact amount depends on factors like the lender’s risk tolerance, credit score, the loan-to-value (LTV) ratio and the borrower’s experience. In some cases, experienced investors or those securing properties well below market value may negotiate lower down payments or even 100% financing with additional collateral.

Hard money lenders tyically don’t have minimum credit score requirements because they do not focus as heavly on a credit score like a bank would.  Yes, many hard money lenders pull credit, but it is usually not the primary factor in their lending decisions. Unlike traditional lenders, hard money lenders focus more on the property’s value and equity than the borrower’s credit score. A higher credit score can sometimes lead to better loan terms, lower interest rates, or reduced down payments, but even borrowers with low credit can still qualify if they have substantial collateral (a suitable property) and a solid investment plan (have the ability to execute/perform on their project).

Most hard money lenders that use private capital don’t require a standard appraisal.  However, they may use a broker price opinion (BPO), an internal valuation, or a comparative market analysis instead of a full formal appraisal. The focus is primarily on the property’s value rather than the borrower’s credit history. Banks and institutionally backed lenders typically require a full appraisal.

The size of a hard money loan is typically decided based on how much down payements funds the borrower has, liquid reserves and affordability.. and not based on credit score.  Example.  A  hard money lender might only approve a borrower for up to a $400,000 loan amount with a 700+ credit while another borrower might get approved up to $800,000 with a 600 credit score.  This is assuming that the 600 credit score borrower had more funds available for a down payment and enough funds, reserves or equity to execute on the project.

A balloon payment on a hard money loan is a  lump-sum payment due at the end of the loan term usually for the remaining principal balance owed.  Hard money loans are short-term, asset-based loans often used for real estate investments. Borrowers make smaller interest-only or minimal principal payments during the term, with the remaining balance due in full at the end. This structure allows investors to only pay the minimum interest only payment during the loan term, but they must be prepared to refinance, sell the property, or pay off the balloon payment when it comes due.

Yes, credit is not the most important part of a hard money lenders underwriting decision.  Lenders will still lend on a good project to a borrower with bad credit.   Hard money lenders pull credit, but unlike traditional lenders, hard money lenders focus more on the property’s value and equity over the borrower’s credit score. However, a higher credit score can sometimes lead to better loan terms, lower interest rates, or reduced down payments, but even borrowers with low credit can still qualify if they have substantial collateral (a suitable property) and a solid investment plan (have the ability to execute/perform on their project).

Interest rates for a hard money loan typically falls between 10% and 16%, though rates can vary based on the lender, loan-to-value (LTV) ratio, borrower experience and credit score. Points (upfront fees) usually range from 2% to 6% of the loan amount. While hard money loans have higher rates than traditional mortgages, securing a lower rate depends on other qualification factors including lower LTV ratios.

Most hard money loans require monthly payments which are just interest-only payment during the term of the loan and then a balloon payment at the end of the term.

Here are some common payment structures:

• Interest-Only Payments: Common for short-term loans (ex. fix and flip loans) where you pay just the interest each month and the principal at the end.
• Monthly Payments: Amortized loans where you pay both principal and interest monthly.
• Balloon Payments: You may pay only interest monthly and make a lump sum payment of the full principal balance at the end of the loan term.

The payment structure will depend on the lender and the specific loan agreement, so it’s important to clarify the terms before signing.

Hard money loans are typically short-term loans, usually ranging from 6 months to 3 years. Some lenders may offer terms up to 5 years, but it’s less common. These loans are designed for real estate investors who need quick financing and plan to refinance, sell, or pay off the loan before the term ends.  In Pennsylvania expect to see a loan term around 1 year.