What Are Typical Interest Rates on a Hard Money Loan?

[Corey Dutton]

When we talk about loans, especially Hard Money Loans, the lender’s interest rate
easily falls between 8% to 18%. The borrower’s credit score has weight on the
interest rate even with hard money lenders. The property and the experience of the borrower
also affect the interest rate given by the hard money lender.

One must be prepared for the loan fee charged on a hard money loan. Hard money lenders charge 2 to 10 points, or 2 to 10 percent of the loan amount, as a loan fee. For those used to bank loans that have 1% loan fee or less, this loan fee charged by a hard money lender can have a little “sticker shock.” What affects the loan fee charged by the hard money lender? Most of the time this fee is set in stone and can’t be affected by credit, experience, or characteristics of the property.

One more factor that should be given importance would be the time it takes for
a hard money lender to fund the loan. Moving quickly is necessary when finding a great
investment property. This is the advantage of using a hard money lender. For this reason, it is a good
move to build rapport with hard money lenders for future loans, particularly if you are an active real estate investor.

[Bill Gulley]

Good points Corey, might throw this out as well.

A residential loan may be subject to requirements for any lender, not just banks. Charging points can get you trouble with usury laws as it is nothing more than pre-paid interest and is factoredto compute the APR.

Private lenders, the guy over there who might loan you the money types, they can get sideways quickly charging junk fees as well. Such issues are game for the established loan company types but as an individual I strongly advise against doing this.

That goes to the borrower as a caution in dealing with individuals that loan money.