Hard money lending is especially popular for the following people:įlippers: If a house in disrepair comes on the market and it looks like it could be fixed and flipped in several months, most borrowers prefer not to go through the hassle of taking out a 15-year loan on the property. The flip side? Hard money loan rates are much higher, and you borrow the money for only a short period of time. Why would any potential borrower opt for a hard money loan from a hard money lender instead of getting a mortgage through a traditional loan from a bank? Because hard money loans are generally less of a hassle than those from traditional lenders, especially when it comes to real estate investments. This differs from a bank that uses money from its depositors.” “A lender could be an individual, a group of investors, or a licensed mortgage broker who uses his own funds. To understand “what is a hard money lender,” it’s important to know what a hard money loan is: It’s simply a short-term loan secured by real estate.īack to the question of who and what a hard money lender is: “It’s synonymous with a private investor,” says Don Hensel, president of North Coast Financial, which specializes in hard money loans. And they loan money for massive real estate investments and regular homes alike. In fact, these lenders fill a legitimate niche in the housing market for quick, asset-based home loans. But you can rest assured that, despite the “hard money” moniker, these professionals aren’t thugs. The real estate term may conjure up visions of crooked-nosed guys who’ll cut off a borrower’s pinkie finger for flaking on a hard money loan.
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