Can someone explain the interest rates for hard money?

[Fahadbin Alam]

So when you get a loan from a hard money for let's say 200k with a 12% interest.

1. If I paid it off the next month do I still need to pay that interest?

2. How does interest work like does it go away if I paid for the whole thing. for example like a membership you would get a good deal if you paid annually.

[Curt Davis]

The interest is annualized so what this breaks down to is 1% monthly interest-only so you would pay $2,000 to the private lender for that one month of use. Also, most hard money lenders charge a loan origination fee, usually in the 3%-5% range. This usually comes off the top of the loan so in your example if they charged on the low end of 3% they would have collected $6,000 at closing taken out of your total loan amount so you would have a $200k loan but only received $194,000.

Good luck!