A hard money loan is a short-term loan from a private lender or a hard money company, secured by the property, often used by investors for fix-and-flips and other time-sensitive purchases. The closing works like any financed purchase, but the lender's requirements, timelines, and documentation can differ from a conventional bank loan.

What Hard Money Is

Hard money lenders focus on the property's value and the deal, not the borrower's credit score. Loans are typically short term, higher cost, and faster to close than conventional financing. Investors use them when speed matters, when the property does not qualify for conventional financing, or when the exit is planned within months.

  • Short terms, often 6 to 24 months.
  • Higher interest rates and fees than conventional loans.
  • Underwriting driven by the property and the exit plan.

What Title and Escrow Need From the Lender

The closing team needs the lender's instructions, the loan documents, and confirmation of how funds will be delivered. Hard money lenders may have specific requirements about vesting, insurance, and the order of disbursements. The lender's title requirements are usually stated in its commitment or closing instructions.

  • The lender's closing instructions and loan documents.
  • Confirmation of the lender's title policy requirements.
  • Details on how and when loan funds are wired.

Title Considerations for Hard Money Deals

The lender will require a lender's title policy, and the title work must show the property is marketable and the lender's lien will be in the correct position. Because hard money deals close fast, ordering title work immediately is essential. Any title issue that takes weeks to clear can kill the timeline.

  • Order title work the day you go under contract.
  • Confirm the lender's lien position and requirements.
  • Expect the lender to require title insurance for its interest.

Costs and Fees to Plan For

Hard money loans carry origination points, higher rates, and sometimes prepayment penalties. The closing costs include the lender's title policy, recording fees, and escrow charges. Investors should model these costs before committing, because they directly affect the profit on a flip or the cash flow on a rental.

  • Origination points and interest are lender-specific.
  • Title and escrow costs vary by transaction and location.
  • Model the full cost with the Fix & Flip Calculator.

Common Closing Issues

The most common issues are title problems discovered late, lender documents arriving late, and funding delays. Because hard money closings run on tight timelines, the margin for error is small. Getting the contract, the lender's instructions, and the title order to the closing team on day one is the best protection.

  • Send the contract and lender information to title immediately.
  • Confirm the lender's funding process and timing.
  • Resolve title issues before the closing date.

The Bottom Line

Hard money is a speed tool, and speed requires preparation. The closing team can move fast when it has the documents and the title work early. Investors should understand the loan terms, plan the costs, and keep the closing calendar tight.

  • Use the Fix & Flip Calculator to model a hard money flip.
  • Read the guide on fix-and-flip closings.
  • Request an exact title and escrow quote for your deal.