Hard Money Terms and Definitions

hese are a number of hard money terms and definitions that you may run into with hard money loans.

Appraisal:-
An independent and expert opinion on the value of a property

ARV:-
After repair value - often used as a basis for lending on rehab loans and construction or construction completion loans.

Balloon:-
A loan that carries a fixed rate and/or payment for a defined period of time, followed by either a change in rate or the loan being due and payable in full.

Cash to Close:-
The amount of cash needed by the borrower to close a transaction.

Closing Costs:-
Costs of the transaction, these fees include points, title and escrow fees, processing fees, recording fees and other fees associated with a real estate transaction.

Conventional Financing:-
Standard institutional or bank financing.

Credit Report:-
Report provided by the credit bureaus which shows the history, current status, and profile of an individual.

Debt Ratios:-
Ratio of debt to pretax income, often expressed as a front (housing payment only) or back (all debt) ratios. Ex- $5000 monthly income, $1400 housing payment, $1700 total debt would equal ratios of 28%/34%.

Down Payment:-
Amount of money needed to cover the difference between the loan amount and the purchase price.

Earnest Money:-
Funds deposited to an escrow company with a purchase agreement to show the buyers commitment to the transaction.

Funds held in Escrow:-
Usually for construction or rehab loans, these are funds held in escrow to be used for construction or repairs to the subject property.

Hazard Insurance:-
Insurance which covers damage or loss to the property.


HUD-I (Settlement statement):-
Final accounting prepared by title company at closing which shows where all of the funds in the transaction was coming from and going to.

Loan-to-Value (LTV):-
Ratio of the loan amount to the value of the property. For hard money purposes, this typically needs to be in the 50-60% range. For example, a property worth $200,000 with a loan amount of $100,000 would be at a 50% LTV.

Note:-
Document signed at closing promising to repay the loan.

Points:-
The base cost of a loan. Hard money loans can range from 3 points to 10 or more, depending on the transaction. These points are typically paid to the broker and/or investor.

Pre Payment Penalty:-
A period of time, during which there is a financial penalty for paying more than 20% of the principal balance of the loan off.

If you are looking to explore your hard money options, please give us a call today at

  877 462 3422.
Our Location
Company Policies

We are located in the San Francisco Bay Area and specialize in alternative, non-institutional financing. Our loans are typically funded by individual investors or groups. Our hard money loans are asset based and are secured by real estate located within California. We do not make consumer loans - our loans are for investment and business purposes only. We are fully licensed and have years of experience. Contact us anytime Monday - Friday 9am - 5pm to discuss the options we can provide for your specific scenario at 877 462 3422.