Hard Money

Definition:
short-term loan, generally used when conventional financing is inappropriate or undesirable to a lender, that is based on the value of the particular property.

Examples:
Hard Money financing is not usually the most sought after means of achieving a loan due to the fact that it produces a loan with higher interest rates and a lesser loan to value of the property than most conventional means of financing. Hard Money financing is typically used for three reasons. The first being when a borrower can not receive conventional financing. The second being because the borrower does not have the allotted time it takes to receive conventional financing. The third being the type of property or business is ineligible for conventional financing i.e. acquisition of an incomplete property.

Hard Money loans are generally a type of bridge loan, usually lasting between six months and two years, in which the financing “bridges” the gap of time when money is needed and traditional, conventional financing can be obtained.

Funding Properties: acquisition, construction, refinancing, purchasing land and improvements to land.

Transaction Types: interest only, partial deed release, participation.

Advantages: quicker than conventional financing because it requires less documentation, financer may overlook, foreclosures, bankruptcies, judgments, poor credit, no credit, no citizenship, unreported income, number of outstanding mortgages.

Disadvantages: less loan-to-value than conventional financing, higher interest rate than conventional financing.

Lender Guidelines: borrower(s), Income of borrower(s), employment of borrower(s), credit of borrower(s), tax returns of borrower(s), assets of borrower(s).