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Are hard money loans interest only?

Hard money loans are a type of alternative financing that is often used by investors to purchase and renovate distressed properties. They are typically faster and more flexible than traditional bank loans, but they also come with higher interest rates and fees. If you're considering a hard money loan, you may be wondering if hard money loans are interest only.


In general, hard money loans can be either interest only or fully amortizing. An interest only loan is a loan in which the borrower only pays the interest on the loan, rather than also paying down the principal. This means that the borrower does not make any progress towards paying off the loan, as the principal balance remains the same.

A fully amortizing loan, on the other hand, is a loan in which the borrower makes regular payments that cover both the interest and principal on the loan. This means that the borrower is making progress towards paying off the loan, as the principal balance is gradually reduced over time.

When it comes to hard money loans, it's possible for the loan to be either interest only or fully amortizing, depending on the terms of the loan. Some hard money lenders may offer interest only loans, while others may offer fully amortizing loans. It's important to carefully review the terms of any hard money loan before agreeing to it to understand whether the loan is interest only or fully amortizing.


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