A hard money loan is a type of financing that is secured by real estate, typically used as a short-term loan for flipping houses or rehabilitating properties. These loans are often characterized by higher interest rates and shorter repayment periods than traditional mortgages. There are several other terms that are used to refer to hard money loans, including:
Private money loans: These loans are provided by private individuals or groups, rather than financial institutions.
Bridge loans: These loans are designed to bridge the gap between the purchase of a property and the availability of long-term financing.
Asset-based loans: These loans are based on the value of the collateral being used to secure the loan, rather than the borrower's creditworthiness.
Rehab loans: These loans are used to finance the renovation or repair of a property.
Short-term loans: As the name suggests, these loans have a shorter repayment period than traditional mortgages.
It's important to note that hard money loans can be more expensive than traditional financing options and may not be suitable for everyone. It's always a good idea to carefully consider your options and weigh the pros and cons before committing to a hard money loan.