A loan that is underwritten with the condition and value of the property as the primary criteria for approval. Secondary issues may include the credit of the borrower, the ability of the borrower to repay the loan and/or the ability of the borrower to manage the property or successfully complete a rehab and sell the property. Owner occupancy, debt ratios and other issues are seldom a factor. Appraisals rather than purchase prices are used to determine value. Cash out purchases are often allowed and are another key benefit. These loans are usually approved within days and are often funded in two weeks or less. Times as short as two or three days are not uncommon. The cost for the benefits of speed of funding and other advantages is typically a moderately high interest rate (usually low to mid teens) and high points (usually 5 to 10). (See definition of " underwriting" below.)
A loan made in cash by a non-institutional lender.
Loan usually from a private lender. Actual money loaned and secured by a trust deed as opposed to a loan carried back by a seller, in which no money passes.
An equity based loan with high interest rates and with flexible guidelines.
A cash loan. The buyer (borrower) receives cash using a new note that is secured by a trust deed. Example; a home equity loan.
A hard money loan is a specific type of financing in which a borrower receives funds based on the value of a specific parcel of real estate. Hard money loans are typically issued at much higher interest rates than conventional commercial or residential property loans and are almost never issued by a commercial bank or other deposit institution. Hard money is similar to a bridge loan which usually has similar criteria for lending as well as cost to the borrowers.