In a nutshell:
Hard money loans are a way to borrow without using traditional lenders. Hard money lenders finance the loan based on the property in question, not on your credit score. If a buyer can’t repay the loan, the hard money lender will take the property and sell it themselves.
- You can often borrow up to 100% of your purchase price.
- Ideal for “fix-and-flip” investors. Hard money loans tend to be short-term (1-5 years) so flippers can keep the property just long enough to turn a profit, sell the property, and repay the loan.
- Usually these loans cost (percentage-wise) much more than an average mortgage, often times up to twice what a regular mortgage does, plus high origination fees.
- Hard money lenders will frequently require you to back-up your loan with real assets.
Is this considered an all cash offer?
No, an all-cash offer assumes that cash is available on-hand, and the contract requires the buyer to deliver verification of such funds (bank statement, letter from bank, etc.). OL recommends writing an offer with financing but without loan contingency & submitting a detailed letter to the seller explaining your financing type.
Learn more about your mortgage options here.