Hard money lenders are individuals or organizations that provide financing to borrowers who may not qualify for traditional financing from banks or other financial institutions. These lenders typically charge higher interest rates and fees than traditional lenders and may require borrowers to repay the loan within a shorter time frame.
The specific charges that a hard money lender may impose will depend on the lender and the terms of the loan. Some common charges that hard money lenders may impose include:
Interest rate: Hard money loans generally have higher interest rates than traditional mortgages. The interest rate may be fixed or adjustable, depending on the terms of the loan.
Origination fee: This fee is charged by the lender to cover the costs of processing the loan application and underwriting the loan.
Underwriting fee: This fee is charged by the lender to cover the costs of evaluating the borrower's creditworthiness and the value of the collateral being used to secure the loan.
Closing costs: These are fees associated with completing the loan transaction, such as title insurance, attorney's fees, and recording fees.
Prepayment penalties: Some hard money loans may include prepayment penalties, which may be charged if the borrower pays off the loan early.
It's important to carefully consider the charges being imposed by a hard money lender before committing to borrow the money. Hard money loans can be more expensive than traditional financing options, so it's important to understand the terms and make sure you can afford the payments.