Defining Hard Money Lending
“What Is A Good Working Definition For Hard Money Financing?”
Hard money loans are basically another way to describe private mortgage lending, but there can be considerable variations to the further interpretation of the phrase.
For instance, some people consider this to be more like a loan shark where if you don’t pay your debt back you could get your leg broken or something like that.
This is more myth and legend than anything related to reality, at least with respect to how hard money works today.
As a working definition, I would say that hard money is strictly about providing equity based mortgages. And when private mortgages are extended to individuals or businesses with habitually bad credit, any failure to meet the terms and conditions of the mortgage, such as payments not made when due, typically will result in an immediate collection action by the lender which some may very as a “hard” manner in which to operate, but when you’re lending to someone who has a history of not paying bills and/or not paying on time, a hard approach to collecting monies outstanding is not unreasonable.
Most private lending does not fall into this more extreme definition of hard money as most private lenders do not want to deal with potential borrowers that are likely going to be a problem.
But regardless, many people still use the term “hard money” as a blanket definition for all private money lending.
In reality, private money is a very useful short term financing vehicle secured by real estate regardless of what anyone chooses to call it.
If you would like to learn more about hard money and private mortgage lending, I suggest that you give me a call and I’ll make sure you get all your questions answered right away.