How does hard money work?

[Pete Storseth]

Ok. As a rookie I have a skewed vision of everything. However I have reado enough HML website claims to be utterly confused or enlightened. Which is it?

If a HML will cover up to 80% of the LTV for a property, and I get a deal that is less than 80%- does that mean i can pay closing costs only and get the loan?

If this is true, I'm going 100% into my negotiations and pursuance of off market leads. If it's TRUE, I could start a "bridge loan" and refinance to get that 5k or so back in a few months or so.

If it's not true, then 20% of the loan is still due at closing, plus closing costs. That does make sense. I could still refi and cash out but the deal has to be absolutely smoking and the numbers are much harder to find.

[Derek Dombeck]

Every HML is different, so I will tell you my criteria.  We will lend up to 65% total based on the After Repair Value of the project. If our borrower can purchase and rehab a house within that valuation, they come to the closing with very little cash. They are responsible for costs above the 65% and we will escrow the money for the rehab until they have used their funds first. This is all based off of a scope of work submitted by them.