The Big Idea (In One Minute)

Private (hard) money loans exist for one primary reason: they close fast when conventional lenders can’t.  To qualify, borrowers often need to demonstrate property value and collateral, but credit and income requirements are typically more flexible, making them accessible for urgent deals.

Why borrowers use private money

• Speed: Approval and funding within 2–14 days, or faster if the file is ready, can provide peace of mind for urgent transactions.
• Flexibility: More forgiving underwriting on credit, income, collateral, and property complexity helps clients feel supported in difficult situations.
• Problem-solving: When a deal is at risk of falling through due to bank declines, bank fallouts, or tight deadlines, private money can provide reassurance that solutions are available.

“In a crisis, the best loan is the one that closes on time.”

The Trade-Off (Ask This One Question)

Private money is usually more expensive—higher rate and points—but understanding the typical costs upfront helps you weigh whether the speed and certainty justify the expense, especially when the alternative is losing the deal.

Would you trade a lower bank rate for a faster close if your deposit—or the property—was on the line?

“A low rate doesn’t matter if you don’t close.”

A Real-World Scenario: When the Bank Delay Became the Deal Killer

A couple was under contract to buy a property with a $100,000 deposit at risk.  The bank moved slowly, and the seller demanded a two-week extension, which cost the buyers the release of their deposit proceeds to keep the deal alive.

Then the unexpected happened: the bank became fixated on a minor title discrepancy.  What looked small on paper turned into the straw that broke the camel’s back.  The loan stalled, the deadline tightened, and the couple faced a brutal reality:

• Close quickly, or
• Lose the $100,000, and possibly the property

To make it worse, the seller had leverage: a backup offer at a higher price.  If the couple didn’t perform, the seller could cancel and take the better deal.

“Deadlines don’t care that underwriting is ‘almost done.’”

The Pivot: How a Mortgage Broker Saved the Deal

In panic mode, the couple called their mortgage broker—someone who understood that a stalled bank file doesn’t mean the end of the road.

The broker pivoted to a private money bridge loan:

• Term: 12 months
• Structure: interest-only
• Purpose: close now, refinance later (if/when conventional financing becomes available)

That pivot changed everything.

“The broker’s real value isn’t rate shopping—it’s exit planning under pressure.”

Why the Private Lender Moved So Fast

The private lender didn’t start from scratch.  They immediately obtained the existing bank file, including:

• Open escrow details
• Preliminary title report
• Loan application and financial statement
• Bank statements
• Insurance information
• Rental agreements (if applicable)
• Credit report
• Background search
• Appraisal

With the file in hand, the lender:

·         Reviewed collateral and risk

·         Ordered/accepted a quick appraisal review

·         Approved the loan

·         Substituted in as lender

·         Drew docs and disclosures

·         Closed in five business days

“Private money wins when the file is complete, and the collateral is clean enough.”

The Bottom Line: Why Private Money Matters

Private/hard money loans aren’t designed to “beat the bank.” They’re designed to replace the bank when time becomes the enemy.

Speed + flexibility make private money a powerful tool when:

• Earnest money is at risk
• Sellers are threatening cancellation
• Conventional underwriting is dragging
• A “small” condition becomes a significant delay
• You need a bridge to stabilize or refinance later

In this case, the private lender’s timely action not only funded the loan but also saved the transaction.  And yes, the broker’s fee was earned—because expertise under pressure is what prevents catastrophic loss.

“When urgency is the issue, private money isn’t a luxury—it’s a lifeline.”