Hard money loan interest rates are only one part of borrowing cost. A useful comparison includes interest, upfront charges, ongoing fees, payment timing, and the balance due at maturity. Obtain current written offers for your particular transaction rather than relying on a general rate range.
Compare hard money loan interest rates fairly
Ask whether the rate is fixed or variable, how interest is calculated, and which amount it applies to. Confirm when interest starts and whether funds held back for later use affect the calculation.
Compare offers for the same amount and expected borrowing period. A lower advertised rate may come with higher fees or different repayment obligations.
Add fees to your comparison
- Origination or broker charges.
- Valuation, legal, title, or other closing costs.
- Servicing, extension, or late-payment charges.
- Any prepayment conditions or minimum-interest requirement.
Ask which charges apply, who receives them, and when they must be paid. Do not assume every loan includes the same fees.
Check payments and the final balance
A manageable monthly payment does not necessarily mean the loan is affordable. If payments cover interest only, a large principal balance may remain due at maturity. Review both the scheduled payments and the exit plan.
The California Department of Real Estate’s borrower guide discusses interest, fees, and balloon-payment concerns. Use appropriate professional advice for the rules and disclosures that apply to your transaction.
Make a simple comparison sheet
For each offer, record cash received, payments during your expected borrowing period, closing charges, and the final payoff amount. Include a delayed-repayment scenario and ask the lender to clarify anything missing.
There is no single rate that makes every deal worthwhile. Take time to compare the full cost with your resources and alternatives. A clear written comparison can help you make a more confident decision.