HARD MONEY LOAN TERMS
The number one Hard Money question we get asked, is “How much do you charge?”
As with all good questions, the answer is “It depends.” There are multiple items we consider for every loan. Every deal, every property, and every person is different. Even though we have a “typical” loan, exceptions are frequently made when and where they make sense.
LOAN TO VALUE and DOWN PAYMENT
A typical Hard Money Loan funds 80% of the purchase, and 100% of the rehab, with you putting in a down payment of 20% of the purchase, plus closing costs. If you get a great deal, we may require less down.
Your property must meet the 70% Loan-to-Value (LTV) requirement twice.
- First, when you buy the property, before rehab;
- Second, based on the After Repaired Value (ARV) after rehab.
BOTH numbers must be 70% LTV or less.
I don’t know you or your deal, so assume the rate will be 12%. If the LTV is lower, or you have a lot of rehab experience, it could less. In some circumstances, it could more. It really depends you as a borrower and your deal.
Assume 4 Points on every loan. Repeat borrowers will see that number go down gradually. Officially, there is a $4,000 minimum, but we frequently reduce it on loans under $100,000.
We include as much as we can in the points above. However, plan on $400-$995 in other fees that will go with getting the loan done. This varies primarily with the source of funds. We always use the lowest cost source that will do your deal.
You will always pay for the Appraisal and title company closing costs.
A typical loan is 12 months.
Call and ask. We’re real estate investors too. We will consider a lot of deals that don’t necessarily fit what’s typical. They do have to make sense though.