Hard Money Loans!

Hard Money Loan: A hard money loan is a loan on an asset that holds value well over time (improved real estate is a particular favourite), where the lender is not dependent on the borrower’s ability to make payments as a basis for approval. Rather, the approval is based on the value of the property. If the borrower does not make the payments, there is no problem because the lender will simply take possession of the real estate and sell it to get its money back.

Hard money loans are often written for one year (usually renewable for subsequent years for a renewal fee), and the payments are interest-only. The loan does not amortize, which means that after three years of making interest-only payments, the borrower will still owe the same amount of principal as he/she did at the beginning. Interest rates are usually in the 13% to 15% range, plus points as high as 10.

Hard money loans are usually done far faster than amortizing loans, because the lender need only verify title and value. Lender does not have to perform due diligence on the ability to make payments.

These loans are generally used for two purposes. One is to quickly get money to solve a financial problem. The other is to get money to take advantage of an immediate financial opportunity.