Hard Money Mortgage

Description:

Unlike traditional mortgages which are used to finance a specific real estate purchase, a hard money mortgage is where a buyer receives the actual money. A first mortgage executed in exchange for cash would be described as a hard money mortgage.

There are many possible origins of the term "hard money". The most likely origin is that the lenders are lending their own cash, or "hard money", whereas most institutions are loaning borrowed cash, or "soft money". Another possible explanation is that it is for "hard to get" loans.

Generally, hard money loans are used when a regular bank will not provide financing. Because of this, the interest rates are usually substantially higher, because there is a higher risk of borrower default.

More information about Hard Money Lenders can be found at wikipedia.