Hard Money

With the recent ecconomic downturn, obtaining financing for any reason has become a challenge, even for the most well qualified individuals. Banks are tightening their lending standards, many wholesale lenders have gone completely out of business, and the programs left are not terribly creative.

In these days of tightened lending, hard money lenders fill a niche role by providing loans in scenarios that are outside of the institutional guidelines. In the recent past, hard money lenders were the lenders you would turn to for bankruptcy buyouts, foreclosure bailouts, or if your credit score was somewhere south of 500. Those days are gone, and the hard money lenders left standing are lending on very conservative guidelines, and are requiring decent credit (or at least an explanation for major dings).

The main underwriting standard for hard money lenders is, and has always been, the equity in the property. The loan to value is the make or break factor. But in today's market, obtaining funding, even from a hard money lender, requires more than just equity in your property. Many packages going to hard money lenders are becoming more and more documented. Having a package put together properly is of paramount importance. Additionally, working with a hard money broker, someone who specializes in hard money and has the resources to find the money you need, becomes a key issue.

In the recent past there was easy money to be made in the mortgage world. Subprime lending was the rage, all a broker needed was a license and a matrix. If you fit in the box, you had a loan. Since the demise of the subprime days, however, many brokers have been left looking for a job in a different industry. Those who are still in the mortgage industry have started to diversify. With no subprime lenders left, many of these brokers have started looking for hard money business. The problem is that in the hard money world, there are very few reps, no matrixes, and the lenders don't advertise much. To become a hard money specialist takes years of work building relationships, learning the industry and cultivating your resources.

If you are in need of a hard money loan, do yourself a favor and make sure the individual representing you has the experience to get the job done. This is truly a case where experience does matter, and you don't want to make the wrong choice only to find out 60 days down the line when your hard money funding has still not occured.

We have a number of resources on this page to help you make that decision. In addition, if you have hard money questions, feel free to submit them below and we will get you a professional answer quickly.