Hard Money Bridge Loans

Hard money bridge loans are neither hard to get, nor are they for bridges. They are, however, loans--and some of the more expensive loans at that. People typically don't search for hard money bridge loans unless all their other financing options, such as a traditional bank loan, have turned out unsuccessful.

Hard Money Bridge Loans Defined

Hard money usually comes from private investors who lend it to people at high rates; these borrowers can't qualify for regular bank loans because of poor credit or some other reason. Since the borrowers are somewhat of a risk, hard money lenders charge them extremely high rates and upfront points. Typically, these are short-term loans paid back on a very strict repayment schedule.

A bridge loan is likewise a short-term loan, but the circumstances are much different. These loans let people use the equity of a home they are selling, for instance, to secure financing on another home. They use the loan to close on the second house before selling the first, and use the sale or their new mortgage to repay the bridge loan.

As is the case with real estate financing, there are many specific and peculiar types of loans, defined by who gives them, who receives them, and what they are used for. For instance, hard money bridge loans are a combination of hard money loans and bridge loans; they are for people who--for one reason or another--have bad credit, yet have equity in a property. While their credit reports may raise a red flag for a banker, a private investor may be willing to take a chance on them.