Hard Money Loan
What is a Hard Money Loan?
How Does a Hard Money Loan Work?
A hard money loan provides money for short-term expenses similar to a bridge loan. A hard money lender provides the loan as long as the borrower is willing to pledge a piece of real property as collateral against any default.
A common example of a hard money loan is a car title loan. In this case, the value of the car serves as the basis for the loan amount instead of a credit score. For this reason, highly solvent individuals and alternative lenders (and not banks) can make hard money loans to people with poor credit who are otherwise unable to secure a similar loan from a bank.
For example, suppose Bob needs money to cover his monthly bills until he receives his next paycheck. Due to his poor credit history, his loan application is rejected by several traditional lenders. Though Bob doesn't have strong cash flow, he does have $110,000 of equity in his home, so he approaches an independent investor who agrees to give Bob a hard money loan of up to $50,000 in return for pledging his home as collateral.
Why Does a Hard Money Loan Matter?
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.