Looking for a hard money definition? Well you’ve come to the right place. This article will not only help you know and understand what hard money is all about but will also help you with a few tips and tricks here and there. Learn how to define hard money today. Read on to know find out hard money definition and more.
Hard money is what you call the funds from an asset-type of loan. This type of loan is not offered by the usual banks that we know. Instead, they are offered by private hard money lenders that have a lot of cash readily available for investors like you. Like mentioned, the loan is asset-based. This means that you don’t have to show off a good credit score or even convince the lender that you have the ability to pay. Leave those things to the bank. What a hard money lender needs to see is the asset or the property you’re investing in. These lenders want to see the potential of that property. They want to know if you are going to make money out of it. In a way, they are also investors. That’s why they want to make sure that you are in the right direction. This type of loan is risky for them because unlike banks, they don’t look at your credit or your ability to pay. That’s why they care about where they put their money in. Now that we’ve discussed hard money definition, let’s discuss more about this type of loan in general.
We already know that hard money is a type of risky loan based on properties, such as a real estate property. Now we want to know more about the lenders. How can they afford to give you funds for investment properties? Well these people or groups are definitely wealthy people. They have the amount of cash to spare. They have a lot of extra cash, making them very liquid in terms of assets. They have the ability to lend investors with a potential. Now as we mentioned, this is a risky type of loan. At the same time, this kind of loan is processed faster. Because you’re not dealing with a bank, the processing time is quicker. As long as you have convinced the lender, then you can receive the funds as soon as possible. It can take days or just a few weeks as compared to a month with a bank. Because of the risk and the faster release of money, they charge higher than the banks. That’s how they earn more.
So now that you’ve learned hard money definition and learned about the lenders as well, you’re probably wondering on how you can avail one. If you don’t know any lender of this kind, you should talk to your real estate agent and ask if they know anyone. Chances are that they do because they have probably dealt with one before. If not, perhaps you’d like to look for brokers in the area who will match you with a lender.