Whether it’s for a fix-and-flip, a spec home, or a rental property, if you’re thinking about getting a Colorado Hard Money Loan, you’ll want to know just how much it’s going to cost you. To give you a ballpark idea, let’s break down the terms, rates, and points on a typical loan.
Unlike banks, Colorado Hard Money Lenders use funds from private investors. Bank loan rates are often based on market conditions, but private loans typically use a variety of factors, from the value of the collateral property to the borrower’s experience in the field. Because of the risk involved, hard money rates are usually higher than bank loans and can range anywhere from seven percent to 15 percent. On top of that, points are assessed, and these can range from 2 to 10 points (1 point equals one percent of the money being borrowed).
The rate and the points will be figured on a case-by-case basis and will be based on the down payment, the collateral, the borrower’s experience, and the Loan-to-Value ratio (LTV). That is, the amount of money being borrowed compared to the appraised value of the property.
Let’s say, for example, that Bill has a great credit score, a proven track record of completing and turning a profit on his flips, and is asking for an LTV of 60 percent. Bill is really likely to get a Colorado Hard Money Loan with a 7.5 percent interest rate and only two or three points. If he raises his LTV to 85, those numbers will likely increase.
Conversely, Jim has a lower credit score, has only one rehab under his belt, and also needs a 60 LTV. Jim’s inexperience makes him a bigger risk for the private lender, so his interest rates will probably be closer to nine percent and he’ll probably see three or four points. If Jim uses more leverage and wants to get an 85 LTV, he’ll be looking at 10 percent or more on the interest rate and five or more on the points.
What Are the Advantages of Getting a Colorado Hard Money Loan?
While those rates may seem high, there are a number of advantages to going with hard money over a bank loan. Qualifications are much lower — if you don’t fit in a bank’s box, they will turn you down flat. A hard money lender can work with you to find a middle ground. Hard money also comes through in a matter of 10 to 15 days, while a bank loan can take much, much longer.
Colorado Hard Money Loans in Colorado
Need a Colorado Hard Money Loan in Colorado? We’ve got you covered. We offer some of the best rates in the business and can get you pre-qualified in a matter of seconds. So, what are you waiting for? Give us a call today to see how we can work together.
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
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.