What the heck is a "Hard Money Loan"?

The term "Hard Money Loan" as it is referred to in the real estate and or lending biz' has a number of meanings stemming from it's root "Hard Money" meaning cash money. Hard Money Loan begins with a general meaning related to loan for hard cash. However, the meaning has developed through years to include non conventional real estate loans (privately funded loans, second trust deeds and equity loans) such as those loans one might get from a hard money broker. Usually a loan where the lender can approve the real estate loan request based on real estate equity primarily, side stepping much of the usual time consuming aggravation, and verification that for example a bank might require to lend that the same amount of money.
Hard money loans of today (as I understand them to be) are those loans usually funded at a higher cost to the borrower in exchange for the ease of obtaining a fast cash type no-red-tape loan.
1.) Mr. Smith (a doctor) goes to his bank and borrows $50K at 9% with no loan fees because he has flawless credit and can afford to wait for months to get the check.
2.) Mr. Jones is (as we used to say kiddingly) on welfare in a coma and sells Amway for a living but has sufficient real estate equity and obtains a $50K hard money loan against equity in his house for 9.5% int. plus a 4 point loan fee and gets his check in 10 days.
Loans come in all types shapes and sizes, and Mr. Smith wouldn't hear of paying 9.5% with his flawless credit and a hard money credit line at the bank, while Mr. Jones must pay 9.5% and 4.5 points to obtain his hard money loan because he is in a hurry and has no credit.
We've extended this to no red tape hard money construction loans (with 100 private investors) eagerly waiting to fund no-red-tape construction loans that can close escrow in days (not months) even if the borrower is unemployed, divorced, transferred, retiring, or has no credit.
Even a borrower with flawless credit may on occasion be willing to pay a little more to obtain a hard money loan if he is in a hurry and can't afford to wait for weeks or months for a traditional lender to gather up and pour over verifications of everything has, does, and is, in order to close escrow.

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Glossary of other terms

Hard Money Loans

Hard Money Construction Loans

What the heck is "Subordination"?

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