What is Hard Money?
Hard Money is money that is obtained from private lenders for real estate investments, debt consolidation, remodeling a current home, or even starting a new business. It is generally a last resort when traditional financing is not available to a borrower. Typical properties of a hard money loan include:
• Based on the value of the property
• Typical Loan Terms of 3, 5, 7, 10, 15, and 30 years
• Higher Interest
• Higher cost to acquire the loan
• Based on equity and not your credit
Top 10 Reasons for Hard Money Loans
1) The banks have turned you down for a traditional loan
2) Hard money can be used to stop foreclosure
3) Stop property tax deferrals
4) Consolidate debt
5) Time is of the essence and you cannot wait 60-90 days to make a decision
6) Pay off IRS liens
7) Starting a new business or growing an existing one
8) Home improvement and renovation
9) Condition of your property will not hurt funding chances
10) Foreclosure or bankruptcy will not hurt your chances either
Benefits of Hard Money
• Close in as little as 14 days
• Light documentation
• Equity driven rather than credit driven
• Fast underwriting turnaround
• Can be approved if you are self-employed or cannot show all income
• Can show income through bank statements
• Loan size of $20,000 to $1,000,000
The Downside of Hard Money?
• Interest rates are higher than traditional loans
• Loan to Value ratios are lower