Hard Money Loans

A Hard Money loan (Private Money) is a collateral-based loan against a hard asset - typically real estate - and is often referred to as a private mortgage or private mortgage note. Unlike typical mortgage loans, hard money loans are provided by private sources (individuals and small lenders rather than large government or Wall Street-backed sources). Hard money loans are often used if someone has difficulty getting approved for a conventional loan. The approval process for a hard money loan is usually much more streamlined than a conventional loan because hard money lenders don't have to follow strict institutional lending guidelines and because they look mainly to the collateral as security for repayment rather than the borrower alone. Hard Money loans can be used for both commercial and residential properties, and since private lenders use their own money, they can create their own flexible lending terms that will meet both their and the borrower's needs. Another advantage of hard money loans is that they are typically closed very quickly and with little documentation. Of course, since these loans are usually “outside of the box” and higher risk, the interest rates for hard money loans are usually higher then with a conventional loan.