What is "Hard Money" Lending

Q: What is “hard money” lending?

The term “hard money” is often used in real estate investment discussions. Essentially, it refers to non-traditional financing. Hard money loans are typically short term loans with relatively high closing costs and above market interest rates. These are commonly used for distressed property situations and rehab projects where traditional funding is not available. Hard money lenders will typically, but not always, require a first lien position in the property. When a first lien position is not available, hard money lenders will generally require that there is substantial equity beyond the amount of the new loan.

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