Hard money lender
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Hard money lenders are lending companies offering a specialized type of real-estate backed loan. Hard money lenders provide short-term loans (also called a bridge loan) that provide funding based on the value of real estate that has been collateralized for the loan. Hard money lenders typically have much higher interest rates than banks (between 11 and 16%) because they fund deals that do not conform to bank standards.
Market
Hard money lenders may serve a regional market, or may offer loans nationwide. Some hard money lenders are represented by brokers who may take a percentage of the loan (called points) in exchange for preparing and submitting the loan documentation (as well as finding a direct lender). Other hard money lenders deal directly with applicants. Other ways hard money lenders may vary include: charging application fees (some charge, others charge fees only when closing); prepayment penalties (some or none); and a focus on investment properties or a willingness to finance owner occupied property as well.Several online directories offer links to multiple hard money lenders for brokers or borrowers seeking a lender.
Regulation
Several states' usury laws, including Tennessee and New Jersey prevent hard money lenders from operating with their usual practices.Effectuation
Hard money lenders will offer a range of requirements on the loan-to-value percentage, type of real estate & minimum loan size for a hard money loan.Asset Based Lenders
An Asset based loan is similar to Hard Money. They rely primarily on the value of the property for security, and less on the credit of the borrower. However, although they are generally higher in cost that confoming full documentation loans, they are not necessarily much higher in cost as a Hard Money loan is.
- [Information on Hard Money Lenders]
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