Definition of a Hard Money Loan The simple definition is that a hard money loan is an asset-based loan. Such loans are typically more expensive than those from conventional sources; i.e., "harder terms."
It can be difficult to get a traditional loan on an investment property because traditional banks are hesitant to lend money when a property is in such bad condition. hard money loans are one way real estate investors can obtain financing. Here are the basics of the hard money and the pros and cons of this type of loan.
A hard money loan is simply a short-term loan secured by real estate. They are funded by private investors (or a fund of investors) as opposed to conventional lenders such as banks or credit unions. The terms are usually around 12 months, but the loan term can be extended to longer terms of 2-5 years.
The term “hard money lender” is used to describe lending outside of traditional banks or credit unions to an individual or a business.