What is a Hard Money Loan and why would you need one? Hard money loans are equity driven mortgage loans that are funded by private investors. This eliminates the common and often stressful process of qualifying, underwriting guidelines, bank delays, and mortgage companies with stringent rules and regulations.

The most common situations that a person would need a privately funded Hard Money loan includes: Recent Bankruptcies, a Real Estate Investor who needs to act FAST, a Balloon Payment on a current mortgage that is due now, Notice of Default has been issued, or bad credit scores. Many times a borrower cannot verify income, tax returns, or bank statements to qualify for an institutional loan. Hard Money loans are often used in emergency situations for people in need of quick cash (Private Loans can be funded in 7-10 days), and for odd or non-conforming types of property. This can include mixed-use property, multiple units, apartments or land to name a few.

In today's economy, the Private Lending business has become a huge positive for investors looking for alternative ways to invest their money. These investors are not looking to foreclose or take the property from the borrower. This is a huge misconception that often gives Hard Money loans a bad name. Private investors simply want a good return on their investment so they protect themselves by using the equity in the property. Most, if not all lenders just want the payments made on time, collecting off the interest.

Qualifying for a Hard Money loan is a much easier process than going through a bank or institution. Bankruptcies, Notice of Default, Foreclosures or Bad Credit Scores are taken into account, but are not used to qualify or disqualify a potential lender. Private Lending is based on the appraised value OR CONTRACT SALE PRICE of the property. This is called the Loan-to-Value (LTV) Ratio. This ratio is the main determining factor in qualifying a borrower for a Hard Money Loan. Once the LTV has been established as conforming to the Hard Money guidelines set forth by a particular lender, the loan can be completed in as little as 7 days.

Today, the Hard Money market is a vital resource for thousands of people looking to improve their financial situation but never thought they could because of a poor credit/financial history. Thousands more also take advantage of the Hard Money market because of the speed with which loans can be funded. For those people looking to make quick improvements to their homes, pay off some old credit debts, or invest in purchasing a home to sell at a later date, the ability of hard money lenders to adjust loan programs based on a borrowers needs is what sets the Private Lending business apart from the conventional mortgage business.