Exact meanings of the hard money, not hard to get, not hard to repay but why it is called hard money? The short answer is that no one knows. No one seems to know the real origin of its name. Commercial money that is lent to borrowers with less than stellar credit and or collateral that is less than desirable by conventional bank sources is hard money. A hard money lender is willing to lend to these sub-par borrowers comes down to both money and security. The cost for a hard money loan is easily twice the cost and twice the interest rate as a conventional lender. For a low Loan to Value on a property is looking by hard money lender. A conventional lender might lend in upwards of 85% on the purchase but hard money lenders will not exceed 65%. Hard money lender does not care about credit of the borrower, income and a lot of supporting paperwork like Conventional lenders
A hard money lender may not even pull a credit report let alone look into years of past tax returns. It is true a hard money lender is taking a higher risk and being compensated well for the risk .Their security has plenty of equity in it. If a conventional deal goes bad that lender’s equity can be wiped away with collection and foreclosure cost. So it can be said that hard money is a better option. For more details
A hard money lender may not even pull a credit report let alone look into years of past tax returns. It is true a hard money lender is taking a higher risk and being compensated well for the risk .Their security has plenty of equity in it. If a conventional deal goes bad that lender’s equity can be wiped away with collection and foreclosure cost. So it can be said that hard money is a better option. For more details