What Are Interest Rates On Hard Money Loans?
Interest Rates On Hard Money Loans Are Substantially Higher Than Traditional Loans
Interest Rates On Hard Money Loans are extremely high due to the level of risk the hard money lender takes. A Chicago Hard Money Loan at 8%. I found it on Google.
Do you believe that? Well you shouldn’t. I just typed in Google Hard Money Chicago and I saw there are companies organically and on Google’s pay per click Add Words advertising Hard Money Loans at 8%. What they want are suckers. The want your information. They want to sell your date. They may want to steal your identity. More likely than not, they just want a lead. They are trying to get as many sales opportunities as possible to and provide them with a Hard or Private Money Mortgage at rates from 12-18%. They offer a Hard Money Loan at 8% as a teaser, but they really don’t have that rate available. It is often called a bait and swith.
Regulations On Interest On Hard Money Loans
Since Hard Money Lenders are not regulated by most states, and even then they are regulated loosely by the states who do license them, most Hard Money Lenders are not subject to the same APR or annual rate disclosure or advertising laws that banks and credit unions are. Therefore, Private and Hard Money Lenders can pretty much advertise whatever they want. As matter of fact, Bait and Switch advertising tactics are not just norm and common place, they are the Hard and Private Money Lenders Industry Standard.
Google Interest Rates On Hard Money Loans
You can Google Hard Money Chicago, New York, LA, Miami and San Diego and you will always find the Hard Money Loan at 8% on Google. Google is venue for these Hard Money lenders to advertise. They are not the Hard Money Industry regulator, and since the Hard Money Industry has pretty much no regulators, it is important to be an informed consumer. It’s actually more important that you be an informed consumer when dealing with Hard Money Lenders than just about any other industry.
Interest Rates On Hard Money Loans Are Higher Than Traditional Loans
Remember Hard Money Lenders are going to offer rates they can’t find in their 401k or in mutual funds. Many 401k’s are getting over 8% over time, and they are relatively secure.
They are going to make credit risks, but they will only lend on investor properties with lots of equity, and purchase properties with a 30-50% down payment.
Basics On Interest Rates On Hard Money Loans
They rarely make loans under 10%, and 12% is considered a low rate. However, 18% could be a low rate if you are flipping a property you are going to make a $100,000 on. The rate should be an acceptable cost of doing business when using Hard Money. If it’s not, you probably shouldn’t even be looking for a Hard Money Loan.