hard money loan

Definition

A short-term, high-interest loan from private investors secured by property rather than creditworthiness, typically used by house flippers who need fast cash. It's called 'hard money' because of the asset-based collateral and the hard hit your wallet takes from those interest rates.

Example Usage

Unable to get bank financing for the distressed property, the flipper took a hard money loan at 12% interest for the six-month renovation.

Origin

Private lending terminology distinguishing asset-backed loans from 'soft' creditworthiness-based financing

Fun Fact

Hard money interest rates can reach 15-18% with points upfront, but the speed and flexibility attract borrowers who can't wait for conventional approval.

Source: Private lending industry standards

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