What Exactly is a “Hard Money Loan?
A “Hard Money Loan” is simply a loan that is made based more on the “hard” assets of the property involved, rather than the credit worthiness of the borrower. In hard money lending the lender looks more at the value of the property than the traditional income, assets, credit, and collateral of the borrower. But as we all know there is no free lunch. If the lender is willing to overlook some of the traditional aspects of loan underwriting in order to give the borrower the funds for his/her project then the rate and points will be proportionately higher than for a traditional loan. However, the loan will typically be underwritten and funded in 10 to 14 days after receipt of all the required documentation. So for many real estate investors the hard money route is a worthwhile alternative to traditional bank financing.
