You are here >> Empowerment Center >> Hard Money Loans

What Is A Hard Money Loan?

A hard money loan is an often used term but most people are not 100% sure about what this term really means. With the many different definitions floating around it is hard to know which one is right.

A hard money loan is different from a bank loan because the person taking this loan usually does not have any collateral and is a high risk customer. This is why they are not eligible for a bank loan and are forced to find a hard money loan. The money is usually loaned from a private business or investor. This loan is given based on their property value, as this is given as their one and only collateral, taking into account the borrower's inability or willingness to pay back this loan. A hard money loan normally has an extremely high interest rate but lower Loan to Value Ratios.

Hard money loans are almost always a last resort for the borrower. Finding a hard money lender is not an easy task unless you are desperately searching for one like most of their customers are. Their customers have already been turned down by the bank because of bad credit or other financial problems, now their only chance is to select this method of funding.

It is important to be clear that hard money lenders are not like loan sharks or other black market lending. This is a legitimate way to retrieve a loan if you are in dire need. They do look at their clients and their property to ensure that in the event that the customer cannot pay the loan, their homes and property possess enough value that the lenders can make a profit when they foreclose it.

People and businesses who buy expensive properties and who already own such homes and want to cash out large amounts of their equity via refinance loans also turn to private money. Real estate investors also use these forms of financing to avoid the terms and conditions of any bank loan. These buyers purchase properties for almost nothing, fix them up and sell them for profit. They use private loans because the loans come with less red tape and restrictions than bank loans.

Hard money loans have many different types of borrowers and lenders. It is a growing industry.

Hard Money Loans Related Articles

Should You Ever Consider Hard Money Business Loans?

Before we go any further, let's make sure we're working from the same definition of hard money business loans.

For the purposes of this discussion, hard money business loans and hard money loans in general, are typically secured by real estate.

Because the lender is not usually concerned with the application of the funds acquired, I'm further defining a hard money business loan as a source of funds invest... Continue Reading...

Hard Money Loans

A hard money loan is a loan provided by a private person or entity, not a traditional lender.

People usually go to this form of financing because they can't get a loan from a regular lender.

Hard money can have several advantages:

-speed in making a loan decision

-able to lend in unusual circumstances

Thes... Continue Reading...