I understand the higher interest in hard money but I get confused when it comes to the points and whether is there an monthly payment paid to the lender. Is the money just paid back at the end of the term? Thanks
hard money is typically interest only payments paid monthly.
Points are charged upfront on the loan amount
Example 100k loan 3 points is $3000 points charge paid at closing by the borrower.
Then they have a final payment called a ballon. At the end of the term you have to pay the balance in full.
Example 100k loan, term is 6 months after 6 months you have to pay 100k plus your interest payments every month during that 6 month time frame.
Hey @Kevin Miller , unfortunately it's not the same for each lender - some lenders charge points (1 point = 1% of the loan amount) while some charge higher interest rates, some require monthly payments while some have all the interest paid at the end.
You'll have to speak to your local HML to see what they agree to. Usually for your first few deals they'll require monthly payments but as you get more experience, the lenders will just require payments at the end.
Hope that helps!
@Cameron Tope thanks
@Tim Johnson thanks