What is Hard Money Loan?
A hard money loan is a short-term loan from private investors or companies that is based mainly on the value of the property rather than the borrower's credit and income. Rates and fees are higher than bank loans and the terms are short, but funding can be fast. Investors often use them for fix-and-flip projects or bridge situations where speed matters more than cost.
Example: An investor buys a distressed property with a 12-month hard money loan at a high rate, renovates it, then repays the loan after reselling or refinancing into a conventional mortgage.