Hard Money Loan

A hard money loan is a loan only meant to be used under extreme circumstances, or as a temporary bridge loan for another loan. It can have a negotiable payment schedule, is fast, sizable, and is usually only for a year or two.

For instance, a homeowner may want to sell their home and want to buy a new one, but they can’t buy a new one until theirs is sold...unless they get a loan (a hard money loan, perhaps) to pay for the new house. Once their old place sells, they can fully repay the hard money loan (better make sure the market is warm).

As you may guess, hard money loans are expensive, since they’re often risky for the lender, as well as speedy, which can be useful if you’re headed for foreclosure, or are competing with other property buyers while your equity is still tied up. Some people even use them to flip houses, gaining a profit on the sell.