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What is a Hard Money Loan?

Up to 90% LTV on Purchase for Individuals, S or C Corporation, or LLC.

Private loan money is most often known as hard money, in most cases the loan comes from a source that are experts in structuring such loans. More often than not a tough money loan will consist of a first mortgage on the residence thus creating hard money residential loans. There are a number of identifying factors involved in private loan money that will be known as hard money loan.


No Seasoning of Funds Required

For instance, as stated it is almost always a first mortgage. Since the borrower's credit is not important around the amount of equity within the property, a first will in effect prevent a possible lack of the entire property if, for instance, another loan is "ahead" from the hard money loan. The reason why the borrower's credit is not important much web hosting loan money is the lender looks to the property for its security, and the lender may also be paid dearly for the chance the lender is taking by basing the money on the property value alone.

You see, another part of a tough moneylender is the fact that they usually charge very high rates of interest in addition to high points. At times, when the rentals are secure enough, those high points will be rolled in to the actual loan. Often the loan isn't paid in the typical Principle + Interest (PI) but more than likely is interest just with a balloon after the stated loan period. In this way, essentially, you is paying interest on interest, since points are interest, because the mortgage might have been calculated including the points, then every payment you makes, paying interest only, is actually interest on interest.

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