Hard Money vs. Private Money, what’s the difference?

The main difference between hard money and private money is the perception of cost. In essence, hard money and private money function the same way. We often find that people use the term hard money for commercial loans and private money for loans to individuals.

What is Private Money? Private Money is a real estate loan from a non-traditional lender. The loan is secured by real estate, by the property, not by you. Hard Money Interest rates typically range from 10% to 14%.

The lender also charges points up front. (A “point” is equal to 1% of the loan amount) Points on hard money can range from 1 to3 points.

Why do people borrow hard money? People borrow hard money because it is usual much faster to acquire than a traditional loan and the lender is loaning money on the value of the property, not on the borrower’s ability to pay. It is an asset based loan.

The benefits of hard money are many from speed (transactions can sometimes be closed in as little as 24 hours) to control. (You may not want to share all of your personal information with a bank. In other cases, you may have an older property such as a manufactured home that does not qualify for traditional financing.

What is Hard Money? Hard Money is a real estate loan from a non-traditional lender. The loan is secured by real estate, by the property, not by you. Hard Money Interest rates typically range from 14% to 22%.

The lender also charges points up front. (A “point” is equal to 1% of the loan amount) Points on hard money can range from 1 to 7 points.

Why do people borrow hard money? People borrow hard money because it is usual much faster to acquire than a traditional loan and the lender is loaning money on the value of the property, not on the borrower’s ability to pay. It is an asset based loan.

The benefits of hard money are many from speed (transactions can sometimes be closed in as little as 24 hours) to control. (You may not want to share all of your personal information with a bank.

Here at Providence Mortgage & Investments, we work with both individuals and business owners to find the right solution to you lending needs.

Please feel free to call us at 928-204-0019 or email us at info.pmi@esedona.net