hard money points

[Harry D Johnson]

Ok so I hope I'm  asking this question correctly,but wanted to know on a hard money loan the points is that apart of the monthly payment or is that the monthly  payment? Also how soon after closing with a hard money loan can I refinance?

[Jeff S.]

One point is one percent of the amount you are borrowing, @Harry D Johnson. If, for example, you borrow $100k at 12% interest only plus two points, traditionally your lender would wire $98k for the deal and you would pay the $2k as points to make up the difference.  Your monthly payment would be (12% per year/12 months per year) x $100k = $1000 per month. Note that points increase your effective interest rate since you are really receiving $98k but making payments on $100k. Note too that nothing in private lending is traditional.

These are not conventional loans. Private/hard money lenders are as different as fingerprints and able to compete freely by varying their terms, so long as they are within the bounds of the law. If you are flipping properties, some lenders will allow you to defer the points (i.e. fund the entire $100k without taking your $2k payment at closing) and even the monthly payments until you sell. Others will allow you to prepay at any time without penalties. This is important if you are adept at flipping properties quickly.

You should look at these as options, or questions you should ask a potential lender (among many), than assume they are the way "most" lenders work.