What is a hard-money lender?

A hard-money lender is one who provides short-term loans to individuals purchasing commercial or residential non owner-occupied real estate. Investors use hard-money lenders to acquire investment properties within days rather than what could take weeks at traditional funding institutions or banks. Hard-money lenders are typically private resources who do not use conventional standards to extend credit to borrowers.

Are hard-money lenders private lenders?

Majority of high risk, min doc. Real estate backed type loans would be considered to be funded more widely through private lenders versus the more conservative traditional banks or entities.

Difference between Hard Money and Soft Money

Hard money and soft money are assumed that hard money is liquid cash or cash on hand while soft money is the money on paper. These definitions are not true however these terms are used to refer to money loaned and the purpose behind these loans.
Apart from the differences stated below, there are some common types between Hard money vs soft money –
Both these loans are used to purchase real estate.
Both these loans can be used to purchase an investment property.
Even though it’s not the only factor considered in Hard money, both these loans consider borrowers history.
Both these types of loans require down payment and or collateral.
Interest payments are mandatory throughout the loan term.
What sets Hard Money and Soft Money Loans apart?
Hard money loans are set up for a specific use and timeline for payback whereas soft loans have no specific
intention or use.
Hard money loans usually cost more due to risk and Soft Money Loans charge less.
Hard Money Loans are asset based to whereas Soft Loans are typically Credit Score Based.
Hard Money at times is more difficult to obtain because it is asset based and must have collateral versus the Soft Money Loan which is Credit Based and easier to obtain.
Hard Money Loans are typically for distressed or properties in need of repair to return to the market and Soft Money Loans are for properties that need no repairs and are market ready.
Hard Money Closing could be just days to whereas Traditional funding of Soft Money can take weeks or a full month in some cases.
Hard Money Loans have much more flexibility on their structure and criteria. Soft Money Loans must follow a strict set of guidelines.
Hard Money Loans require far less paperwork then Soft Money Loans.

Benefits of Letting Us Manage Your Hard Money Lender Relations

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Private Lenders versus Traditional Lenders

There are a number of views regarding the difference between a “private lender” and a “hard money lender”. In my opinion, they are about the same – a non-institutional lender offering short-term mortgage loans to real estate investors.
A private lender is an individual investor who lends his/her own money and may not charge any points/origination fees.

A hard money lender is a private lending company that charges points and may get their funds from investors.”

However, the lending companies which many real estate investors refer to as “hard money lenders” will commonly refer to themselves as a “private lender” or a “private money lender.”