"Hard
Money" is the name given to a loan scenario
when the parameters of the deal is outside
the typical bank lending guidelines.
If the bank will not make a loan due to
problems with the property or the borrower,
the loan will fall into the "hard money"
realm of lending. Hard Money is a High Cost,
High Interest, Short Term Loan (3 years or
less) and based on a Real Estate Asset such
as a piece of land, residential investment
home or commercial property.
Hard Money Lenders provide liquidity and
financing based strictly on the value of the
real estate asset (Collateral).
Unfortunately, many people think that the
term "hard money" means the same thing as
"stupid money." This is not the case.
It's called
"hard money" because it is a
hard/difficult/impossible loan for the
average bank to do. Unlike a bank or lending
institution that requires an application,
paycheck stubs, tax returns, personal
financial statements, copies of bank
statements, permits, business licenses,
appraisals from their specifically approved
companies, etc., Hard Money Lenders are much
more lenient and require far less paperwork.
Hard money lenders can also move quicker
than banks and mortgage companies. Often
times a "hard money" loan is far easier to
obtain than a normal bank loan, because most
hard money lenders will NOT require all the
financials/tax statements/bank
verifications/employment verification and so
on, required for your loan to get to
closing. Hard Money Lenders are Private
Lenders bringing Private Funds to the
Borrower
