How Are Hard Money Loans Calculated?

How Are Hard Money Loans Calculated?
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If you’re looking to invest in real estate, you may be considering a hard money loan. However, you likely have questions about how hard money loans are calculated going into the process. There are many things that make hard money loans differ from traditional loans, including the fact that hard money loans are short term compared to more traditional loans. 

Generally, a hard money lender offers loans to those purchasing investment properties, such as the typical “fix and flip”. Another of the things that make hard money loans different from more traditional loans is their availability to borrowers who may not be able to receive other types of loans. But there are still plenty of things to look at more thoroughly to understand the hard money loan process and what you can expect with hard money loan payments. 

 

The BMC Difference

Hard money loans are named as such because they look at “hard” assets – when purchasing real estate, that asset being the property itself. Calculating the loan also takes into account the length of the loan, which is typically around six to 12 months.  

There are many things that make Bay Mountain Capital different as a hard money lender, including our company’s process for calculating hard money loans. It’s important to know upfront what you can expect when it comes to hard money loan payments so you can be sure you’re in the right place financially to take on this kind of loan. That’s why understanding how this type of loan is calculated is important for any individual looking to take one on. 

Lenders take several factors into account when calculating hard money loans. The loan is typically based on either the “as-is value” of a property – how much the property is worth in its current condition – or the “After Repair Value” or ARV. It may be possible to get a large percentage of the ARV when obtaining a hard money loan – enough to pay for the initial cost of the property in addition to the repair costs for the property. This hard money loan scenario is often ideal for those who are looking to “fix and flip” or “fix and hold” a piece of property. 

However, the exchange of fees for rates is typically not a good deal. What makes Bay Mountain Capital unique as a hard money lender is their ability to work with their customers, ensuring they understand the total costs of their loans. For example, while a rate may only be 8 or 9%, with fees the total cost an individual could repay could be up to 12 to 14%. 

 

The Bay Mountain Capital Hard Money Loan Calculator

Those who want to know in advance how much they might potentially be able to receive, and who want to know in advance what they can expect in terms of hard money loan payments, can use the BMC hard money loan calculator.  The BMC hard money loan calculator has the user input many different details to come up with a number to estimate the hard money loan payments individuals will be making after they receive a hard money loan. Among the details the individual will be including in the hard money loan calculator will be the purchase price of the property they are interested in buying, the total rehab amount of the property, the After Repair Value (or ARV) – or how much the property is estimated to be worth after all planned restorations have been made, and finally whether the individual’s credit score is above or below 620. Individuals with more experience will also typically be able to receive better loan terms. It should also be noted that those individuals with a lower credit rating will have their projects considered on a case-by-case basis.

Overall, BMC makes it easier to get a loan that you can be certain you’ll be able to afford in the long run, with terms that work for you rather than against you. If you’re interested in working with Bay Mountain Capital as a hard money lender, you can use our hard money loan calculator today to find out how more about terms, fees, and how much you can expect when working with BMC. 


About Bay Mountain Capital:

Bay Mountain Capital has been in business for more than a decade, closing approximately 2,000 loans. We specialize in financing all types of residential and commercial property investments throughout Texas and Georgia. Using common sense and value-added approach, we strive to incorporate these principles into our underwriting and closing processes.

As a direct lender, Bay Mountain Capital can close a loan within one day after receiving a complete file and clear title. The process generally takes two weeks for a residential loan but can be accelerated where circumstances require it.

We are primarily an asset-based lender, which means that qualification requirements are limited. Our rates and fees are among the lowest in the industry.

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