What is Hard Money?
The definition of “hard money” when referred to in real estate financing, is essentially a non-bankable loan. The name hard money is frequently interchanged with “no-doc” or private loans. For a hard money loan, the underwriting decisions are based on the borrower’s hard assets (real estate). Hard money loans typically close relatively quickly.

Hard Money VS Traditional Lending
Traditional loans from banking institutions rely heavily on borrowers income, credit, tax returns, etc.. as opposed to hard money’s primary reliance on the hard real estate asset. Along with requiring substantially more documentation, conventional lenders have minimum credit scores (typically mid 600 Fico and above) as opposed to hard money loans that are underwriting on the collateral as opposed to the borrowers credit  Along with different underwriting standards, loans on conventional commercial loans can take months to close, hard money commercial loans close much quicker. The final important differentiator between hard money and conventional financing is the interest rate. Since there is more risk in a true collateral based loan, the interest rates are higher than a conventional mortgage.

When is a Hard Money Loan Right?
There are numerous circumstances where a hard money loan is the best option for a client:

• Borrowers with impaired credit 
• Tax Liens/ Judgements/ unpaid utility bills, etc…
• Partner Buyout
• Owner Occupied properties
• Time constrained borrowers
• Foreclosure avoidance
• Foreign Nationals