If we talk about exact meanings of hard money then it will be surprising for most of us, money which is not hard to get not hard to repay but we call it hard money why? No one knows the real origin of its name. Hard money is commercial money lent to borrowers with less than stellar credit less than desirable by conventional bank.
So a hard money lender is willing to lend to these subpar borrowers comes down to both money and security. As compare to interest rate a conventional lender the cost for a hard money loan is twice. Hard money lender is looking for a low Loan to Value on a property. hard money lender is taking a higher risk because in Typical conventional loan lender lend in upwards of 85% on the purchase but Hard money lenders will not exceed 65%. Credit of the borrower, income and a lot of supporting paperwork is too much important for Conventional lenders while a hard money lender does not even pull a credit report. More Details
So a hard money lender is willing to lend to these subpar borrowers comes down to both money and security. As compare to interest rate a conventional lender the cost for a hard money loan is twice. Hard money lender is looking for a low Loan to Value on a property. hard money lender is taking a higher risk because in Typical conventional loan lender lend in upwards of 85% on the purchase but Hard money lenders will not exceed 65%. Credit of the borrower, income and a lot of supporting paperwork is too much important for Conventional lenders while a hard money lender does not even pull a credit report. More Details