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Hard Money

Hard Money

A Hard Money Mortgage, often referred to as a Hard Money Loan, is a type of real estate loan that is typically issued by private individuals or investors rather than traditional financial institutions like banks or credit unions. These loans are commonly used for real estate investments or purchases where traditional financing options might be unavailable or impractical.

The key characteristics of a Hard Money Mortgage include:

  1. Collateral-Based: Hard money loans are secured by the value of the property being purchased or invested in. The property itself serves as collateral, and the lender evaluates its value to determine the loan amount.
  2. Quick Approval and Funding: Compared to traditional mortgage processes, hard money loans usually involve faster approval and funding times. This can be advantageous for real estate investors who need to move quickly on opportunities.
  3. Short-Term: Hard money loans are generally short-term loans, often with terms ranging from a few months to a few years. They are intended to provide temporary financing until the borrower can secure more conventional, long-term financing or until the property is sold.
  4. Higher Interest Rates: Because hard money loans are perceived as higher-risk loans due to their short terms and collateral-based nature, they typically come with higher interest rates than traditional mortgages.
  5. Flexible Terms: While traditional mortgages have standardized criteria, hard money lenders have more flexibility in setting loan terms. This allows for negotiation and customization based on the specific property and borrower.
  6. Credit and Income Considerations: Unlike traditional mortgages that heavily consider the borrower's creditworthiness and income, hard money lenders focus primarily on the value of the property. This can be beneficial for borrowers with less-than-perfect credit.

Hard money loans are often used by real estate investors who are looking to acquire properties quickly, renovate them, and then either sell them for a profit or refinance with a more traditional mortgage. It's crucial for borrowers considering a hard money loan to thoroughly understand the terms, costs, and potential risks associated with this type of financing. Consulting with experts in real estate and lending, such as professionals at Ferrari Lending, can provide valuable insights and guidance when navigating hard money mortgage options.

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I represent clients who authorize me to do so. I do not work for or represent the interest of any mortgage lender or other duly authorized entity to whom I may submit a mortgage application on behalf of a Client. My services are provided in a Mortgage Broker capacity and I am not authorized to approve or deny a mortgage loan request. NMLS 1691763 / NMLS 1322774