Fees Charged on a Hard Money Loan

what fees can a morgage broker charge on a hard money loan?

1 Answer

Hard Money by their nature are taking a greater risk than a mainstream loan.  That being said, hard money loans are made by  *Private Investors who are not held to the standards of state or federal miniums for fees.   

One of the advantages of hard money lenders is that they are not restricted by institutional rules from financing any types of properties. There are lenders that prefer to make loans to residential homeowners or homebuyers, as well as those who favor non-owner occupied homes or commercial properties. Some require considerably more paperwork in their applications than do others. Some will review an applicant’s credit, others won’t. Their lending criteria can be as varied as their own individuality and risk comfort levels allow them to be. Raw land, nursing homes, shopping malls, hotels and motels, gas stations, movie theaters or duplexes can all be funded with hard money. Institutional lenders may balk at many of these, especially without the presence of an extremely financially-strong borrower.

Hard money lenders are extremely helpful for investors who run into problems showing their income.  So there fees can range between 4-8 points or higher depending on the deal.  You need to ask yourself if the loan is really necessary and remember the loan will probably be short term not long term.  Need to determine if the fees charged vs months of loan out weigh doing nothing.