What is Hard Money?

   A hard money loan is a specific type of asset-based loan financing through which a borrower receives funds secured by the value of a parcel of real estate. Hard money loans are typically issued at much higher interest rates than conventional commercial or residential property loans and are almost never issued by a commercial bank or other deposit institution. Hard money is similar to a bridge loan, which usually has similar criteria for lending as well as cost to the borrowers. Hard money is essentially an asset-based loan with a high interest rate. The credit score of the borrower is not important, as the loan is secured by the value of the collateral property. Many hard money mortgages are made by private investors, generally in their local areas. Typically, the biggest loan one can expect would be between 65% and 70% of the property value. That is, if the property is worth $100,000, the lender would advance $65,000–70,000 against it. This low LTV (loan to value) provides added security for the lender, in case the borrower does not pay and they have to foreclose on the property. California Hard Money loans are collateralized against the property for which the loan is made. Our private lenders fund in the first lien position, meaning that in the event of a default, they are the first creditor to receive remuneration. Many California Hard Money loans are based on a percentage of the “quick-sale value” or “purchase price at auction” of the subject property depending on the specific lender. This is called the loan-to-value or LTV ratio and typically hovers between 60 and 70% depending on which of our lenders you choose to use for your purchase. For the purpose of determining an LTV, the word "value" is defined as "today's purchase price" for some of our lenders and “current market value” for others. Your final purchase price at auction would dictate which of our private hard money lenders we would recommend to finance your purchase and finalize the transaction. Private hard money lenders fund the transaction in 24 hours in accordance with ARS statutes associated with purchase of homes at trustee sales.

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Dennis DahlbergDennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com
www.Level4Funding.com
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true.

Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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