What is Hard Money?
A hard money mortgage is an alternative to borrowing money from a bank or credit union.
The hard money mortgage is typically based on the subject properties equity with only a small amount of attention paid to the borrowers credit.
Loan amounts vary greatly from lender to lender based on what their comfort level is. Some private money lenders will not lend more than 50% of the properties value, while some will consider going as high as 75-80%.
Understandably, with the greater risk that these loans come with to the investor, rates and fees tend to be a bit more than what a traditional bank loan may come with.
The majority of hard money loan requests are for cash to rehab a property to either fix and flip it or to fix it and refinance the finished product with a bank.
Another feature of hard money loans that is very attractive with property developers is speed. A hard money loan request can close in as little as 5-10 days after the initial request. This can come in handy for a client or borrower who needs to move quickly on a good real estate opportunity.
You can read more about what goes into the decision making and approval process when looking at a hard money loan here... The Five "E"'s of Private Money.
If you are looking at a real estate opportunity in either Massachusetts or Rhode Island and have questions about hard money and if it would work for you, please call me with your scenario.