Posted by Rick G. on June 21, 2001 at 11:34:56:
Hard Money is simply money that comes from non-traditional lending sources instead of traditional lenders (banks, saving and loans, mortgage companies). While this money can be easier to obtain, it comes at a higher price. Interest rates ranging from 3 to 5 above the average 30 and 15 year mortgage all the way into the high teens. Also a higher amount of equity in the property is required. 35% is not unusual. The reason being the hard money lender is better protected if the buyer defaults on the loan. Credit cards can be one of the easiest sources of hard money. If you luck on balance transfer checks, they sometimes will even wave the usual 3% transfer fee for using the checks.
That being said, getting a hard money loan is not a walk in the park. It just is an alterative to traditional lending sources. You can always consider a loan from family, friends, or business associates. They can be a source of “softer money” loans. They may still want more money than a traditional lender. But, they may be more flexable in other areas. Something to think about.