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 Hard money rates

Borrower Guide to hard money rates and private investors in real estate   

 
 Interest rates of hard money loans are normally higher than bank rates. It can be two to six percent higher and in some cases even more. The overall notion is that if a borrower cannot obtain a bank loan it must be a risker proposition and an investor who is taking such risk should be compensated accordingly.
The rate is not dependent on Central Bank Rate but more dependent on the real estate market and availability of hard money credit.  When a borrower defaults they may be charged a higher "Default Rate".which may go up to or around 18%28%.  Some investors insist on getting interest payments for certain number of years or months, in this case there will be a  prepayment penalty. The penalty will insure that in the event the investor is being paid prior to certain time he will be guaranteed additional interest payments.

There is no direct way to know the rate and terms on private loans. Factors such s property condition and market condition at the time of the loan request play important role. "The property is more important than the borrower" is the key dominant argument when lenders deciding on approving any hard loan . The table below shows hard money rates and terms common  considerations. Since each loans is unique there may be other factors  involved in the underwriting consideration. The best way to find out is to have a basic request done and shop your hard loan among several lenders/brokers/ investors. 

Points and fee considerations

  Points  Residential Commercial   Points Land
Great Location 2-6  (Depending also on loan size)   3-10
Average Location 3-8   4-12
Bad Location or very remote 5-12   5-15
Second Position Add 2-5 to points   Add 3-8 to points
Great property condition  May get discount 1.0-2.0 of points   May get discount 1.0-2.0 of points
Average condition       
Bad property condition  Raise points 1.0-3.0   N/A
Great credit  May get discount 0.5-1.0 points    
Average credit      
Bad credit/ no credit Raise points 1.0-3.0   Raise point 1.0-3.0 of rate
Need loan super fast (Or add points) Raise points 1.0-5.0   Raise points 1.0-5.0
       

Interest rate considerations

  Rate  Residential Commercial   Rate  Land
Great Location 9%-12%   11%-13%
Average Location 10%-13%   12%-15%
Bad Location or very remote 11%-14%   13%-16%
Second Position Add 1%-2% to rate   Add 1%-4% to rate
Great property condition  May get discount 0.5%-1.0% of rate   May get discount 0.5%-1.0% of rate
Average condition       
Bad property condition  Raise rate 1.0%-3.0% of rate   N/A
Great credit  May get discount 0.5%-1.0% of rate    
Average condition      
Bad credit/ no credit Raise rate 1.0%-3.0% of rate   Raise rate 1.0%-3.0% of rate
       
       

The complete guide to hard money loans and private investors in real estate

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Lenders/ investors

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Guide to hard money loans and private investors in real estate

Loan To Value (LTV), hard money rates

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Commercial Loans in California

Database of nationwide hard  lenders

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Hard lenders

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Mortgage note

Financing and no down

Trust deeds

Hard money rehab

Fix and Flip lenders
Fast equity loans
Home construction loan
 
 
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