1. What is a Hard Money Loan?

A hard money loan is a type of short-term loan secured by real property, typically used by real estate investors. These loans have higher interest rates than traditional mortgages but are easier to qualify for and fund faster.

2. How Does the Payment Calculator Work?

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 (term in months)

Explanation: This formula calculates the fixed monthly payment required to fully repay a loan over its term, including both principal and interest.

3. Understanding Loan Payments

Details: Hard money loans typically have shorter terms (6-36 months) and higher interest rates (8-15%) compared to traditional mortgages. Payments are interest-heavy in the early months.

4. Using the 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 loan terms?
A: Terms usually range from 6-36 months with interest rates between 8-15%, though this varies by lender and property.

Q2: Are there other fees besides interest?
A: Yes, hard money loans often have origination fees (2-5 points), closing costs, and sometimes prepayment penalties.

Q3: How does this differ from a traditional mortgage?
A: Hard money loans are asset-based (not credit-based), have shorter terms, higher rates, and are typically interest-only or balloon payments.

Q4: Can I calculate interest-only payments?
A: For interest-only payments, simply multiply principal by monthly rate (annual rate ÷ 12 ÷ 100).

Q5: What's the advantage of hard money loans?
A: Faster approval, flexible terms, and based on property value rather than borrower creditworthiness.