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Hard Money Lending

All About Hard Money Lending

Money can be either "soft" (or "hard") money. Soft money is usually a standard loan from a bank. Hard money is an alternative to loans banks don't usually offer. A hard money loan is a short-term loan that is asset-based and can be used to secure real estate. 

This type of loan typically has a higher interest rate than a traditional residential or commercial property loan. These loans are often secured by an individual or an independent lending company. You can also contact hard money mortgage lenders online to get hard money business loans.

Hard Money Loan Definition

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STRUCTURE:

Hard money loans can be used to quickly obtain funds, often in times of financial distress such as bankruptcy or foreclosure proceedings. The interest rate for a hard money loan is usually higher than that of a bank loan. 

However, credit scores are not often important. The quick-sale price of the property is usually the basis for structuring the loan. 

The property must then be sold within four months. This quick-sale price is used to create the loan. Hard money loans are typically assessed at 60-70% of the quick-sale value of the property. This protects the lender in case the borrower defaults.

RATES:

Hard money loans were not subject to federal or state regulation in the past. However, some states have restrictions on interest rates. These rates do not depend on bank rates. They are dependent more on the realty market and the availability of hard money loans. 

These loans are typically more costly than traditional loans, and they carry a higher risk for the borrower. This risk is often the collateral that was used as collateral for the loan. Late payment, prepayment, and penalties can lead to higher interest rates.