What are typical terms for hard money loan?
Hard money loans are a type of financing that is secured by real estate, typically used as a short-term loan for flipping houses or rehabilitating properties. These loans are often characterized by higher interest rates and shorter repayment periods than traditional mortgages.
The terms of a hard money loan will vary depending on the lender and the specific circumstances of the borrower. However, there are a few key terms that are typically included in hard money loans:
Interest rate: The interest rate is the percentage of the loan amount that the borrower must pay to the lender as interest. Hard money loans generally have higher interest rates than traditional mortgages.
Repayment period: The repayment period is the length of time that the borrower has to repay the loan. Hard money loans generally have shorter repayment periods than traditional mortgages.
Fees: Hard money lenders may charge a variety of fees, including origination fees, application fees, and closing costs.
Collateral: Hard money loans are secured by real estate, which means that the borrower must pledge the property as collateral for the loan. If the borrower defaults on the loan, the lender may be able to foreclose on the property to recover the outstanding balance.
It's important to carefully consider the terms of a hard money loan before agreeing 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.