A hard money loan is a certain type of financing in which funds are received by the borrower based on the value of a specific parcel of real estate. The Hard Money Loans are typically issued with a higher interest rate, higher than conventional commercial or residential property loans. They are almost never issued by a commercial bank or other deposit institutions. Hard Money loans are more expensive because they are not based on traditional credit guidelines which protect those very same banks that do not offer Hard Money. Hard Money loans are property driven and generally have a much quicker turn around.
Commercial hard money is similar to traditional hard money, but may sometimes be more expensive because the risk is higher on investment properties or non-owner occupied properties. These types of loans may not be subject to the same consumer loan safeguards as a residential mortgage may be in the state the mortgage is issued. Commercial hard money loans are often short term and therefore interchangeably referred to as bridge loans or bridge financing.