This
If you’re thinking about getting a loan from a private lender for the first time, you might be curious about how much hard money loans cost. Because hard money loans are sponsored by private investors, their costs are much greater than bank loans.
Here’s a handy hard money loan calculator to assist you in calculating all of the fees.
The following are the costs of hard money lending:
the rate of interest
Points up front (1 point = 1% of the loan amount)
Rate of Interest
Hard money loan interest rates are always higher. Hard money loans are riskier than standard lending institutions are willing to take on.
In average, hard money loan interest rates will start at 7%, with the most frequent rate being 10%.
Points to considering Up Front
For hard money loans, the upfront points are normally three points greater than what a bank would provide. Depending on the risk, some loans can carry as many as 10 points upfront.
These points are paid to hard money investors in order to increase their yield. Pay for the time and resources spent by the hard money lending group to package the loan.
The points will be different depending on the loan amount. For example, a small $50,000 private money loan might have a 10 point fee, but a $500,000 loan might have a 3 point fee. For particularly high risk, the interest rate can be greater.