Explaining hard money terms

Financing, Hard Money Lenders, Private Money
1

I’m looking into using hard money for a rehab, but usure how it works or better how much it will cost me. I’m looking at getting a small loan, only about $40,000. The terms they are offering are as follows…

Loan Term: 12 Months
Interest Rate: 15% interest only, paid monthly
Loan Fee: 5 points
Loan-to-Value: Up to 70% of the After Repaired Value
Prepayment Penalty: None
Lien Position: First lien only

5 points, does that mean $5,000? I’m just not sure how to figure this all out.

2

A point is 1% of the loan. So for $40,000, 1 point = $400, so 5 points would be $2000.