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Where Does the Term “Hard Money” Come From?

October 15, 2017

If you’re involved in the real estate industry, you’ve probably heard the term “hard money” before. But what exactly does hard money mean? Where does the term come from? In this post, we’ll go over where the term “hard money” comes from, and why these types of real estates loans should really be named something else.

where does the term hard money loans come from

Why are they Called Hard Money Loans?

The term “hard money” originates from the equity which the loan is based. When borrowing money to purchase a home or building, the lender needs some for of guarantee they won’t lose money on you. With normal, or “soft” loans this comes in the form of pay-stubs, credit checks, and bank account balances. With a hard money loan, the loan is based on hard assets such as the property the loan is for or another property in your name.

We Prefer Private Money Loans instead of Hard Money Loans

In the industry, we typically prefer to call these types of loans private money loans. The main reason begin this description is a more accurate representation of the type of loan being used. A “hard money loan” is backed by private lenders as opposed to large financial institutions; this is why it makes more sense to call it a private money loan.

Who Uses Hard Money Loans?

Again, we prefer private money loan, but for the sake of this post we will stick with hard money loan. Typically, hard money loans in Baltimore, MD go out to rehabs, short term flips, or for an initial purchase where you know you can pay the money back quickly. Long term investments simply are not a good idea for hard money loans because they start to get expensive after the first couple of years. The idea is, you get your money quick, and you either fix-up the property and sell it (for more money), or you know you can re-pay the loan with money from other assets which simply take longer to acquire.

Baltimore Private Money Loans

If you’re in search of a private money loan in Baltimore, MD be sure to partner with an experienced and reputable private money lender. There are plenty of private money lenders in the industry; some are great to work with while others can be difficult and deceptive. Take some time to do your research and seek out a lender who has the experience and reputation such as Maryland Private Mortgage

Maryland Private Mortgage is Baltimore’s leading direct private mortgage lender with over 50 years of combined vision and experience in rehab investor lending. For more information on our private money loans, or to get approved for a Baltimore City private money loan, visit our loan application page or give us a call at 410-661-8300, today!

The Maryland Private Mortgage Lending Team

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Member of “The American Association of Private Lenders”All loans are for business commercial use purposes only. No proceeds may be used for or are intended for any consumer or personal use

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