1. What is a Hard Money Loan?

Hard money loans are short-term loans secured by real estate, typically used by investors for fix-and-flip projects or bridge financing. They have higher interest rates than traditional mortgages but faster approval times and more flexible terms.

2. How the Payment is Calculated

The calculator uses the standard loan payment formula:

Where:

• \( P \) — Loan principal amount ($)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Number of monthly payments

Explanation: This formula calculates the fixed monthly payment required to fully amortize the loan over its term.

3. Understanding Loan Terms

Details: Hard money loans typically have terms of 6-24 months with interest rates between 8-15%. Points (1-3% of loan amount) are often charged upfront.

4. Using This Calculator

Tips: Enter the loan amount in dollars, annual interest rate as a percentage (e.g., 12 for 12%), and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's typical for hard money loans in Gardena?
A: Rates typically range 10-14% with 1-3 points, 6-24 month terms, and 60-70% loan-to-value ratios.

Q2: Are payments interest-only?
A: Some are interest-only with balloon payment; this calculator shows fully amortizing payments.

Q3: How does this compare to traditional mortgages?
A: Hard money costs more but funds faster (days vs weeks) and has more flexible underwriting.

Q4: What additional costs should I consider?
A: Factor in origination points, closing costs, prepayment penalties, and rehab budget if applicable.

Q5: When is hard money the right choice?
A: Best for short-term needs (fix-and-flips, bridge loans) when speed and flexibility outweigh higher costs.