At HardMoney Company, we provide fast, asset-based hard money loans and bridge loans tailored for real estate investors tackling fix-and-flip, rehab, commercial, multi-family, and other investment projects. These short-term financing options prioritize the property’s value over traditional credit checks, enabling quick closings (often in as little as 7 days) when banks say no.
Understanding industry terminology helps you evaluate deals, negotiate terms, and execute your exit strategy with confidence. Below is a clear, comprehensive glossary of the most important terms surrounding hard money loans, bridge loans, and real estate investing.
After Repair Value (ARV)
The estimated market value of a property after all planned renovations or repairs are complete. Hard money lenders often base loan amounts on a percentage of the ARV (rather than the purchase price) for fix-and-flip or rehab projects.
As-Is Value
The current fair market value of a property in its existing condition, before any improvements. This serves as a baseline for collateral evaluation in hard money underwriting.
Asset-Based Lending
A loan approval process focused primarily on the value and equity in the real estate collateral rather than the borrower’s credit score, income, or debt-to-income ratio. This is the foundation of hard money and bridge loans offered by HardMoney Company.
Balloon Payment
A large lump-sum payment of the remaining principal (and any accrued interest) due at the end of the loan term. Most hard money and bridge loans are interest-only during the term, with the full principal repaid via a balloon payment at maturity.
Bridge Loan
A short-term loan that “bridges” the gap between purchasing or rehabbing a property and securing longer-term financing (such as a conventional mortgage or sale proceeds). Ideal for investors needing quick capital for transitions.
BRRRR Strategy (Buy, Rehab, Rent, Refinance, Repeat)
A popular real estate investing method where an investor buys a distressed property, rehabs it, rents it out to stabilize cash flow, then refinances into a long-term loan to pull out equity and repeat the process. Short-term hard money or bridge loans often fund the initial buy-and-rehab phase.
Collateral
The real estate property pledged to secure the loan. In hard money lending, the collateral (and its equity) is the primary factor lenders evaluate.
Construction Holdback (or Holdback)
A portion of the loan proceeds reserved by the lender and disbursed in stages (draws) as renovation or construction milestones are completed and verified by inspections. Common in rehab and fix-and-flip loans.
Cross-Collateralization
Using equity in multiple properties as additional security for a single loan. HardMoney Company may explore this option for borrowers seeking higher loan amounts or more flexible terms.
Debt Service Coverage Ratio (DSCR) / Non-DSCR Loans
DSCR measures a property’s net operating income against its debt payments. HardMoney Company specializes in non-DSCR loans, meaning approval does not require strong cash-flow coverage—lending is based on property equity instead.
Default
Failure to meet loan obligations (e.g., missing payments or failing to repay at maturity). This can trigger foreclosure proceedings.
Draw Request
A formal request submitted by the borrower (or contractor) for release of holdback funds once specific rehab or construction work is completed. Requires supporting documentation and often an inspection.
Equity
The difference between the property’s current market value and any existing debt. Strong equity (“skin in the game”) improves loan terms and approval odds in hard money lending.
Exit Strategy
Your planned method for repaying the loan—typically selling the property (flip), refinancing into a permanent loan, or renting it out. Lenders require a clear, realistic exit strategy to assess risk.
Extension (or Extension Fee)
An agreement to extend the loan’s maturity date beyond the original term, usually for an additional fee. Common when a flip or refinance takes longer than expected.
Fix and Flip Loan
A short-term hard money loan specifically designed to fund the purchase, renovation, and quick resale of a property for profit.
Foreclosure
The legal process by which a lender can take ownership of the collateral property if the borrower defaults. Hard money loans often include streamlined documentation for faster resolution.
Hard Money Loan
A short-term, private, asset-based loan secured by real estate. Funded by private lenders (not banks), these loans offer speed and flexibility for investors who need capital quickly for investment properties. HardMoney Company provides hard money loans from $150,000 to $5,000,000 with rates typically in the 8–15% range.
Interest-Only Payments
Monthly payments that cover only the interest accrued on the loan, leaving the principal balance unchanged until the balloon payment or maturity. This structure preserves cash flow during rehab or holding periods.
Loan-to-Cost (LTC)
The ratio of the loan amount to the total project cost (purchase price + rehab/construction costs). Lenders use LTC alongside LTV to evaluate risk in value-add deals.
Loan-to-Value (LTV)
The ratio of the loan amount to the property’s value (often based on ARV for rehab projects or as-is value). HardMoney Company typically offers up to 80% LTV on commercial loans; lower LTVs mean lower risk and potentially better terms.
Maturity Date
The date when the full loan balance (principal + any remaining interest/fees) becomes due. Most hard money and bridge loans have terms of 6–36 months.
Origination Points (or Points)
Upfront fees charged by the lender, expressed as a percentage of the loan amount (1 point = 1% of the loan). These are common in hard money transactions and are paid at closing.
Prepayment Penalty
A fee charged if the loan is repaid before the maturity date. Not all hard money loans include this; always review the commitment letter.
Private Lender / Private Money
A non-bank lender (individual or company) that provides hard money or bridge loans. HardMoney Company acts as a direct private lender, offering personalized service without broker fees.
Rehab Loan
A hard money rehab loan that finances both the purchase and renovation of a property, often with funds held back for construction draws. Perfect for investors improving distressed assets.
Term Length
The duration of the loan (typically 6–36 months for hard money/bridge products). Shorter terms suit quick flips; longer terms may apply to stabilized commercial or multi-family holdings.
Underwriting
The lender’s evaluation process. In hard money lending, underwriting is fast and asset-focused—emphasizing property value, equity, rehab scope, and exit strategy rather than extensive borrower financials.
This glossary covers the core concepts you’ll encounter when working with HardMoney Company or any hard money/bridge lender. If you’re evaluating a deal or have questions about how these terms apply to your specific project (fix-and-flip, commercial purchase, refinance, etc.), our team is here to walk you through the numbers and get you funded fast. Contact Us
