What Factors Most Affect Hard Money Interest Rates?

Any non-bank loan can be called, a private money loan. Hard money loans fall into this category of non-bank financing and are given their namesake because they are loans against “hard” assets. For borrowers used to qualifying for bank loans, the interest rates charged by non-bank lenders may be shocking. For example, hard money interest rates can range from 7% to 15%, or even higher. Hard money loan interest rates are not ruled by the same factors that affect bank rates. I will mention just a few reasons here, but comment below and add additional reasons or factors to this short list:

1.Rapid Fundings: Hard money lenders can move faster towards a loan closing than banks. Because of the short closing timeframe, a higher risk factor is associated with hard money loans, which will increase the interest rate charged.

2.No credit checks: Because most hard money lenders don’t perform credit checks on borrowers, this is another reason rates are higher. This ties in with number one above.

3.Condition of Property: Hard money loans are perfect for vacant properties, or properties in need of repairs. Because the needed work may or may not get done after a loan closes, this adds a higher level of risk, thus a higher interest rate.

If you are eager to learn more on alternatives to bank loans, read our blog called ‘Hard Money 101’ on your spare time. You may be glad you did! Hard Money 101 Blog: http://privatemoneyutah.com/hard-money-101/

Posted by Corey Curwick Dutton