What Is a Hard Money Loan and How Does It Work in Connecticut?

Hard money loans are short‑term, asset-based loans secured primarily by real estate rather than the borrower’s personal credit. In Connecticut’s competitive fix‑and‑flip market, speed and flexibility are more valuable than rock‑bottom interest rates – making hard money a go‑to funding tool for investors who need to close in under two weeks.

Why Investors Choose Hard Money

• Speed: Conventional lenders can take 30–60 days to approve and fund a loan. A hard money lender can underwrite a deal in 48–72 hours and wire funds in as little as 2–3 business days once clear title is confirmed.
• Asset‑based underwriting: Decisions revolve around the property’s current value and after‑repair value (ARV), not your W‑2 income or tax returns. That’s a lifesaver for self‑employed investors who write off most of their income.
• Flexible terms: You can borrow against distressed properties, mixed‑use buildings, or even land—scenarios that scare traditional banks.

Typical Connecticut Loan Terms

Some hard money rates in Connecticut range from 9–12 % with 1–5 points (depending on the size of the loan amount) paid at closing. Most lenders will fund up to 85 % of purchase price and 100 % of rehab costs, so long as the total loan remains below 70–75 % of ARV. Terms are usually 12 months with interest‑only payments, giving you time to renovate and resell or refinance.

The 5‑Step Closing Timeline

1. Deal Analysis (Day 0): Submit purchase contract and rehab budget to your lender.
2. Soft Approval (Day 1): Lender issues a term sheet within 24 hours.
3. Valuation (Days 2–7): An appraisal or broker price opinion confirms ARV.
4. Title & Insurance (Days 3–8): Title search, hazard policy, and corporate docs are finalized.
5. Closing (Days 5–14): Funds are wired to the attorney. You take title and start the rehab.
Closing timeline can vary based on the type of loan, borrower submitting the documents in a timely manner.

Exit Strategies

Most investors flip the property within six months. If the market shifts or the renovation takes longer, you can refinance into a DSCR or conventional rental loan—provided the finished property meets long‑term lending guidelines.

Key Takeaways

Hard money in Connecticut is all about speed, leverage, and flexibility. If you control your rehab budget, buy at the right price, and plan your exit before you close, hard money financing can help you scale from one flip a year to several profitable projects without being limited by bank red tape. https://www.quickrealestatefunding.com/