The Truth about Hard Money

 

Although “borrowing hard money” might sound more daunting than using another type of loan, individuals that jump to this conclusion might be unaware of how this form of lending typically works. Secured by the value of a borrower’s property, hard money usually functions as a short term loan (bridge) that is more diverse than its traditional counterpart. Because hard money usually comes from private sources, such as Veristone, the loans are underwritten with the risk tolerance of the money lender in mind. This allows lenders to be more lenient in providing unconventional terms to a borrower in exchange for higher cost. Borrowers that cannot meet parameters required by a bank often find solace in opportunity provided by hard money lenders as they are subject to less regulation, can fund almost immediately, have a shorter application process, and look more to the asset than the borrower regardless of their credit or income position. When used appropriately, hard money becomes “Opportunity Capital” allowing investors access to projects which would otherwise be out of reach.


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