How do Hard Money Loans work?

[Annwar Matani]

Hi everyone

Can someone explain to me from start to finish how does a HML work? I always get scared when someone suggests HMLs... I literally think of loan sharks or getting your house or assets taken away from you when I hear it LOL.

What does points mean? How much are closing costs? And I understand (I think) your making interest only payments until you pay back the loan? What if I finish the project in 3 months do I owe any more interest on it? 

Debating to use a HML for a flip or a BRRR. I'm trying to pinpoint my financial strategy in attaining these projects and HMLs are always suggested to me.

My goal this year is to buy my first investment. I want to operate from a place of logic, not fear. This forum so far has helped me very much in learning.

Thanks in advance