What is a Hard Money Loan?

The term “Hard Money Loan” as it is referred to in the real estate or lending world is a type of non-bankable loan.

Usually this means a loan where the lender can approve the loan request based upon the value of the assets and the equity in the assets.

Hard money loans are those loans usually funded at a higher cost to the borrower because they are non-bankable by a traditional lender. It’s considered a non-traditional loan.

Private money is money borrowed from a private individual rather than a bank or lending institution.

Typical Lending Guidelines:
Property types: All income producing property types considered
Security: 1st mortgages or Deed of Trust Loan
Sizes: From $50k to no limit
Loan Term: 1 day to 5 years
Loan-to-Value: up to 65% or 70% - considered on a case by case basis.
Interest rates: Vary from 10% to 18%
Prepayment: Negotiable

The hard money lender will tend to over look many items that are critical to a traditional lender and soft money loan. These overlooked details will include:
- Foreclosures
- Bankruptcies
- Judgments
- Credit dings, dents and damage
- No credit record or citizenship
- Unreported income
- Unknown sources of down payment