Hard money loans are wonderful, but they can also be risky. You pay double interest and the news regularly carries details of unscrupulous lenders. Here's what you need to look into to avoid being cheated: The terms - Lenders make their own terms. Many tend to charge a series of interest-only repayments spaced out by payments-only, finally followed by one large balloon payment at the end. The balloon payment is what you have to worry about. Here's where you have to pay a substantial sum to repay the debt. If you're not disciplined, you can find yourself in default. The FDIC created Law 6500 on Consumer Protection to protect borrowers who find themselves in such situations. It restricts balloon loans so that they cannot mature in less than 5 years. In some cases, balloon loans will be banned. Make sure that your lender follows these requirements before you agree to accept any loan. Negative amortization - Negative amortization also means an endless loop of debt which ...