The Cost of Hard Money Loans

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January 5, 2019

The Cost of Hard Money Loans

Hard money loans in Colorado are just like any traditional loan when it comes to cost. But what you need to be aware of is that the lender is free to charge fees and rates that he or she chooses.

Most consumers are fairly familiar with the way a loan works. You are paying someone or some business to uses their money. In most cases, you are charged interest, and when borrowing a larger sum of money, you are required to pay additional fees. Hard money loans in Colorado work in much the same manner as most loans. But the key difference is that Arizona Hard Money Lenders are free to set the loan terms to pretty much whatever they decide. So it is very important to have all of the loan documents reviewed by a legal professional prior to the signing and closing of the loan.

The interest rate on hard money is normally a bit higher than a traditional loan, but that is a small price to pay if you are unable to qualify for a bank or mortgage company loan. You can expect to pay between 7 and 15 percent for a run of the mill hard money loan currently. But remember that the interest rate is up to the lender and that he or she might increase the interest rate if there is a great deal of risk involved in the loan.

In addition to interest, you can expect to pay a few fees as well. Most lenders will charge a fee for the property appraisal. This is to ensure that the amount that you are asking for is less than the property value and that the property is in good condition. Some Arizona Hard Money Lenders will charge points much as a bank does. This would mean that for each point charged you are paying 1% of the loan. This is a simple way to calculate fees without itemizing for all of the tasks included in processing and funding the loan. Other lenders will charge for each step in the process such as fees for loan processing, notary, documentation, and funding. Neither way is better as long as you understand all of the fees that you are paying and why you are paying them.

Total Cost of the Loan

It is always a wise choice to ask the lender for a written list of all of the fees that you will be paying for all hard money loans. It is similar to asking for a price breakdown when buying a car. This document will show you the total of the loan plus all fees and interest so that you can see the final cost of the loan. Having this number will allow you to compare your different options to select the most cost-effective loan.

Make The Best Choice

In most cases, you will evaluate all of the Hard money loans in Colorado on the total cost. But other factors such as the payment schedule and time to fund the loan could be important. The cheapest loan might not always be the smartest choice. In the end, you need to pick the hard money lender who offers you the best terms and costs to meet your needs.



Dennis Dahlber Broker Ri CEO Level 4 Funding LLC
Dennis Dahlberg

Broker/RI/CEO/MLO

Level 4 Funding LLC 
Hard Money Lender

Hard Money Loans

Hard Money Loan

Arizona Tel:  (623) 582-4444

Texas Tel:      (512) 516-1177

Dennis@level4funding.com

Dennis Dahlberg Broker/RI/CEO


NMLS 1057378 | AZMB 0923961 | MLO 1057378

22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027

111 Congress Ave | Austin | Texas | 78701  

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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