Why do we call it hard money?
When it is difficult to get a bank loan, we turn to a hard money loan.
It is harder to pay back because the rate is higher.
It comes from private individuals using their hard earned money.
It is hard to get because it is more equity based and less credit based.
It is used during hard times.
Many feel that the name “hard money” has a bad connotation, so many have switched to calling it “private money”. However, private money can be referred to as money coming from private individuals or pools of money funded by many individuals.
The term “hard money” refers to money that is backed by a “hard asset”. A “hard asset” can be considered anything that is “tangible, in physical form, or truly existing” that holds value.
Hard money gained popularity in California during the Gold Rush when banks secured printed paper money with gold as a means of value control among other things. Most refer to hard money as a loan secured by real property, however, hard money can also be money or a loan secured by any hard asset of value. There are many hard money lenders available, but it’s good to shop and see what they charge as far as points, interest rates and terms.
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