Best Hard Money Loan Rates
When it comes to finding the best hard money loan rates ini 2022, it’s important to do your research. That’s why we’ve put together this guide to help you find the right lender for your needs. We’ll discuss what a hard money loan is, factors that affected hard money loan rates and more. So whether you’re looking for a new lender or just want to learn more about the process, read on!
What is a Hard Money Loan?
A hard money loan is a type of asset-based financing offered to real estate investors. It’s quick, it requires little paperwork and the interest rates are typically higher than traditional loans.
Hard money lenders are often called upon when banks are unable or unwilling to provide funding for a project. Hard money lenders are often private investors who lend capital out of their own pockets. They don’t care about a borrower’s credit score, they’re looking at the potential for a good return on their investment. These loans are often used in conjunction with private equity or other forms of financing to get a project started.
They can be used for many different types of projects such as:
- Fix and flip loans
- Commercial loans
- Apartment complexes
- Long term rental properties
- Bridge loans
- And more
Four Factors that Affect Hard Money Loan Rates
There are many things that affect hard money loan rates. Some of these factors include:
The Loan Term
Short-term loans tend to have the highest interest rates, while long term loans are much lower. The reason hard money lenders charge more for short term loans is because they’re riskier from a lender’s perspective.
Your Property’s Location
Location plays a big role in your loan. If your property is located in an area that has a high rate of rentals, crime, theft, etc, lenders will be less likely to fund your project. This affects hard money loan rates because the lender wants to feel confident that their investment will be stable and secure.
A Real Estate Investor’s Experience
Lenders are much more willing to take on projects from experienced investors. That’s because they know that the investor has already experienced struggles, knows what needs to be done in order to fix it up and turn a profit. On the other hand inexperienced investors are much riskier because there’s no evidence that they’ll be able to perform the renovations required or that they will be able to sell or rent properties.
Are You Vested in The Success of The Property Selling For a Profit?
The final factor that affects hard money loan rates is if you’re vested in the success of the property. Lenders want to know that you’re going to stand by your project and help it succeed. That’s why applicants who share a percentage of profits or put up a significant chunk of capital are more likely to get approved for lower interest rates.
The Facts Behind Loan Rates For 2022
According to the Federal Reserve, the US prime interest rate for 2022 is projected to rise steadily throughout the year. This will make it more difficult for borrowers to find affordable rates. Interest rates are expected to rise due to recent all time lows.
While hard money loan rates are typically much higher than traditional loan rates, lenders will still be monitoring the Federal Reserve and other real estate activity.
So, What are the Best Hard Money Loan Rates?
The best hard money loan rates will vary widely depending on your location. But in general, rates will be lower if you have experience and are vested in the success of your project. If your property is located in an area with a high population density, lenders may also be more willing to take less risk when it comes to interest rates.
We’ve researched, worked with and spoken to many hard money lenders across the US. Some of the best rates you can expect to find on a hard money loan will be in the 5-8% range. This is typically assuming 6-12 month loan. There will almost always be origination fees (aka points) which will cost you another 1-3% of the loan amount.
Some of the higher end fees we’ve seen are as much as 13-15% with points in the 3-5% range. This is often a result of your location or lack of experience.
Regardless of your situation, always be sure to check with multiiple lenders before comitting as you could save yourself thousands of dollars in profit.
Key Takeaways – Best Hard Money Loan Rates
When looking for a hard money loan, it’s important to be aware of the different factors that will affect interest rates. These include the length of the loan, your property’s location, your experience as an investor and whether or not you’re vested in the success of the project. In general, lenders are more likely to offer lower interest rates to experienced investors who are also invested in the success of their project. Rates can vary widely depending on your location so it’s always a good idea to shop around with multiple lenders before committing.
Some of the best rates you can expect to find on a hard money loan will be in the 5-8% range. This is typically assuming 6-12 month loan. There will almost always be origination fees (aka points) which will cost you another 1-3% of the loan amount. Some of the higher end fees we’ve seen are as much as 13-15% with points in the 3-5% range. This is often a result of your location or lack of experience.
Hopefully this article answered your questions about the best harrd money loan rates.