Pricing on Hard Money Loans Varies Widely Among U.S. States

[Corey Dutton]

Why do the interest rates charged on hard money loans vary so greatly from one State to another? Borrowers ask me this question all the time. For example, in California rates charged on hard money loans start as low as 9%, versus rates starting at 14% in New Jersey. But why such a wide difference in interest rates charged between these two States?

Unlike mortgage interest rates that are governed by specific factors, interest rates in private money are largely influenced by supply and demand as well as other unique factors. One of the biggest factors is related to “the going rate on the street,” which is the interest rates that other hard money lenders are charging in that particular City or State. This is likely the best reason for why hard money interest rates on the East Coast are so much higher than interest rates charged on the West Coast.

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