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What is Hard Money

By billionairdeals

Hard money commercial  loans are sometimes called bridge loans because in the development stage of the project  the borrower will need a short term loan with a reasonable rate to get the project started. Hard money can be used by the borrower for whatever purpose they chose so long as the equity in the property or  the collateral  that is provided is sufficient to cover the loan.

The term hard money loan means the money has a high interest rate because of the short time the many will be needed. Today the term has always been used in the commercial loan arena for  such  products as investments, private funded loans, land  loans and  rehab loans and  lines of credit loans. Now it is possible to refinance your commercial building  to purchase investment properties instead of a purchase loan.

A maximum loan on property owned by the borrower is called a cash out loan. The borrower has a loan to value, which means the loan on the property, or collateral used is equal to the value of the property or collateral used to secure the loan. All  type of l commercial loans have a higher interest rate because the money is hard 80%-20% mortgages.

A home equity loan is one type of loan available for a hard money cash out loan.  Did you know  Negative ARM loans are good for investment properties if the borrower is looking for a short-term loan or is  he or she is self employed with cash flow issues.

A negative ARM mortgage requires the  payment of interest only on the loan. If at any time doing the loan if the  interest for a period is not paid in full the balance is added to the mortgage. The end will result is an increased mortgage balance and a loss of equity in the property  that you used for collateral. As the mortgage balance increases, the interest on the mortgage loan increases even though the interest rate remains the same. If both the loan balance and the interest rate increase, the property owner may be forced to sell or the loan before the property is foreclosed.

Four tips the  lender may require before he approves your  hard money loan.

1.         A  description of the property

2.         The buyer must provide a Title to collateral

3.         Summary of project must be submit

4.         Select a Lender who  must accept all lender terms unconditionally

Search various hard money lenders  before you decide on any loans.


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This entry was posted on September 29, 2007 at 5:48 pm and is filed under Apartment FSBO, Billion $ Deals™, Blogroll, Bridge Loans, Commercial Real Estate, Commercial Real Estate funding, FHA expansion, Finance Commercial Income Properties, HTC Program Funding, HUD properties, Hard Money, Housing Center of TDHCA, Locate Commercial FSBO, Mobile Home Parks, Private Money, Purchase Multifamily Properties, Screen Commercial Buyers, Tax credits, Texas Department of Housing, apartment building, apartment financing, apartment income producing property, calculate the noi, capital investing, commercial financing, commercial hard money, commercial loans, commercial markets, commercial money funder, commercial real estate financing, generate income, get the funding, mortgage brokers, mortgage markets, real estate investing guide. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

3 Responses to “What is Hard Money”

  1. Stephanie Rollin Says:
    October 9, 2008 at 1:03 pm | Reply

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  2. E J Says:
    November 10, 2008 at 4:24 pm | Reply

    Hello,
    I’m looking for commercial real estate funding….Multi-family.
    Let me know if you can secure funding.
    Thank you

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