Interest rates when it comes to hard money loans tend to work considerably different than a conventional loan obtained through a bank. There are several factors that play a role in determining the rate.
Fort Lauderdale, FL -- (SBWIRE) -- 05/30/2019 -- Supply and demand is one example. If several private or hard money lenders are working in the same area, a borrower may receive a lower rate as a means of boosting competition. On the other hand, interest rates may be higher if the particular private money lender is among the few willing to lend money in the area a borrower is considering.
While hard money loans are appreciated for their rapid funding turnaround times, the interest rate may be affected by the amount of time the money is needed. The funds for a hard money loan can be provided in mere hours, but if it is possible to close within a few days, the chances of obtaining a better rate may be increased. This is because underwriting the loan within a short amount of time is deemed a greater risk to the lender. Hence, the more time provided, the more due diligence and underwriting that the lender can do.
Loan-to-value (LTV) ratio is common with hard money lending. Compared to a traditional lender, hard money lenders use asset-based loan underwriting, which means the LTV holds significant value as opposed to a credit score when determining the interest rate for the loan.
About Monroe Funding Corporation
Monroe Funding Corporation is a direct equity lender serving clients throughout Central and South Florida, specializing in first mortgages on non-owner occupied residential and commercial property investments as well as real estate loan options. Our fast and flexible loan programs get clients to the closing table quickly and professionally. For more information on hard money loans Miami, please call 954-816-0388 or fill out the application.