Hard money loan rates are typically higher than traditional loans, with interest rates ranging anywhere from 7 to 25 percent and points ranging from 1 to 6 points. The terms of hard money loans can also vary depending on the situation and lender, so it’s important to do your research before settling on a loan.

Hard money loans may sound expensive but they definitely serve an important purpose. This article will discuss hard money loan rates, variables that may affect your rate, how they’re calculated and more.

What is a Hard Money Loan?

A hard money loan is a type of loan that’s secured by real estate, typically for the purpose of financing a property. It’s often used as an alternative to more traditional financing sources and can be useful for people with bad credit or who are in need of quick funding.

What are Typical Hard Money Loan Rates?

As we said earlier, you can expect to pay anywhere from 7 to 25 percent with points ranging from 1 to 6 points. The terms of hard money loans can also vary depending on the situation and lender.

Some lenders will require monthly payments with varying amounts.

Variables That Will Affect Your Hard Money Loan Interest Rate

There are several factors that will affect your hard money loan interest rate. These include the amount of capital you put down as a down payment (if any), the type of property you’re purchasing, and the current market conditions.

Your credit and experience may also play a role. While most lenders don’t require good credit or significant amounts of experience, you may have to pay more if you have bad credit and very little experience.

Recommended Reading: How to Approach a Hard Money Lender

How is Hard Money Loan Interest Calculated?

Hard money loan interest is typically calculated on a month-to-month basis and is based on the amount of capital you borrow. The rate will be applied to the loan amount over time, so it’s important to understand how much you’ll owe each month.

For example, if a lender charges 12% interest, this would be 1% per month. You would then take the total loan amount and multiply it by 1% to get your monthly interest. Many lenders charge interest only payments throughout the course of your loan. It’s also not uncommon for a lender to charge a minimum amount of interest. In this case, if you pay off your loan in the first month, you’ll still owe the minimum amount of interest. This is why it’s so important to understand the terms of your loan.

Can You Get a Hard Money Loan With Bad Credit?

Yes, it’s possible to get a hard money loan with bad credit. This is one of the benefits on hard money loans. They are based less on the borrower and more on the property you are purchasing. Many lenders will have a minimum score in the 500s to get a loan. If you have bad credit, check out our list of the best hard money loans for bad credit.

In Summary – Hard Money Loan Rates

Hard money loan rates can range from 7 to 25 percent with points ranging from one to six. Your credit score and experience may affect the rate you receive, but this is not always the case. The terms of your loan will depend on the lender, so it’s important to understand what you’re agreeing to before signing any agreements. Additionally, hard money loan interest is typically calculated on a month-to-month basis and will be based on the amount you borrow. Lastly, it is possible to get a hard money loan with bad credit, although you may have to pay more for it. It’s important to remember that while hard money loans can be beneficial, they also come with risks.

Hopefully this article answers all of your questions about hard money loan rates, their risks and how to better understand them. Thanks for reading!