Hard money typically refers to a hard money loan, in which a borrower acquires an asset-based loan that is secured by the value of a particular area of real estate. Hard money loans are offered as an alternative to conventional loans that may not be the best option for a borrower in a particular situation, such as when the borrower needs to acquire funds quickly in order to purchase real estate quickly.
In this type of hard money transaction, it is common for the interest rates to be higher than other types of commercial or residential property loans. Because hard money loans are somewhat similar to bridge loans, they are usually issued to borrowers through some type of investment firm other than a traditional bank. However, the main difference between hard money and a bridge loan is that hard money may also refer to a situation in which bankruptcy or a foreclosure on a parcel of real estate occurs.
Hard money loans and mortgages are also usually localized, made by local, private investors. Because the loan is secured by the value of the piece of real estate, credit scores are also usually not a significant factor in determining whether the loan is viable or not. As such they are also used for short-term financing for borrowers to escape the foreclosure of their own property.
Funding can sometimes be received in as little as five days, which makes hard money loans particularly attractive for borrowers in time-sensitive situations, such as needing extra financing in order to finish construction on a project.
Key points When Considering A Hard Money Lender
Minimal Or No Loan Costs On:
• Loan Processing Fees
• Prepayment Penalties in Most Cases
• Underwriting Fees
• Document Preparation Fees
• Credit Report Fees
Speed & Convenience:
• Fast Closings
• Minimum Documentation
• No Credit Reports
• No Income Verification
Flexible loan Terms:
• Interest-only Payments
• No Prepayment Penalties on Most Loans
• Maturity Up to Two (2) Years |
