Hard money loan question!

4 Replies

Hey all! Quick question I’ve been doing some research on hard money loans for flipping houses. I was just wondering if someone could explain how the point system works? Also do you pay the loans interest and payment monthly? Or is it just one lump sum when the flip is complete? Thanks!

Hey Anthony, the points are the percentage you pay as a fee. so Lets say you borrowed $100,000 from a hard money lender. Say they charge 6 points upfront, that means 6% of the borrowed amount (100K) so your points (fees) up front are $6,000. Depends on the hard money lender, some of them will let you pay only monthly interest on those 100K borrowed, and at the end you pay the whole lump sum.

Hi @Anthony DeMichael ,

Like @Raad Qumsieh mentioned, the points is the fee that you would pay at closing. Every hard money lender will have different interest rates and points. Since HML loans are typically short term (6-12months), in most cases, they will be interest only. You would have monthly interest payments and pay the principal (initial loan amount) at maturity / end of the loan.