Hard Money Financing

I am working on a deal and have talked to 1 hard money lendor so far who said they would do the loan at 8 points and 10% for 6 months. Is that a reasonable rate to expect from a hard money lendor? This deal is a 72% LTV and my business partner and I have an average credit score of about 650. Since I have never dealt with hard money lendors before I wanted to see if the experienced pros think this is reasonable and or average.

8 Points
72 % LTV

The interest rate for a hard money lender is phenomenal; the points are on the higher end though.

I’ve seen people confuse LTV with ARV all the time with HML, can you clarify if this is a Loan to Value or an After Repair Value loan, the LTV could have you putting down 28%, not a good HML in my book.

Who are you using?

Thanks for posting.
The loan is on repaired value of 179,900 repair cost of 35k and purchase price of 90,000. The way it was explained to me is that it would be a 6 month loan with interest rolled in so no payments and basically no cash needed on my part except the appraisal fee. There are no other fees and I would have a loan if it went the entire 6 months of around 142,857 through Equity Development. My plans are to flip the house.

Allot of HML roll everything into a loan if there is room. By everything that means interest payment, points, and misc. loan fees. You wont have to use any of your own money except for the appraisal (as you said), home inspection and earnest down payment.

8 points is high, that would equal roughly $8,500 but the interest payment is by far the lowest I have seen. Usually HML are between 13-20% (16) and 3-7 points (6).

I’m not familiar with that company so I can’t give you any input, but if they are only charging you interest and points that’s very unique. Make sure you understand their prepayment penalty if they have one, if your not careful that can add allot of extra money onto the deal. Think of HML as a business partner, the rates and points are high but so would a partners shares.

Good Luck!

wadams, if you dont mind, can Iget the info on Equity Development? web addres, telephone #?
if you want to share the info?
Thanks :slight_smile:

Are you paying the 8 points up front???
many HML will allow you to roll in 6months payments if the LTV works and the points at times. But still they want to see some money from you, especially on a 1st deal. As you do more deals with a HML, they get more flexible.

But if you look at it this way…8points and 5% interest of 6months +13%

Typcial HML… 3-5points ad 12-18%. Lets go with avgs…
4 points + 7 percent interest = 11%…

So your paying 2% more over a 6 months period which is only about $3500 which is not to bad really. Keep the HML for 1 yr your at a break even point really…

Fair. Hell it is good. Take it.