Points = % = Fee
As a local private & hard money lender in Tacoma I get all types of questions about how private loans are structured and how they should be used. For a private & hard money “deep dive” check out this blog the definitive guide to hard money lending I wrote to give a foundation for most questions.
A client of mine referred a friend to me who read the blog the definitive guide to hard money lending and let me know he was still struggling to fully understand what hard money “points” are and how they relate to the over all cost of the private / hard money loan.
There is nothing worse than needing a solution to a problem and hitting a road block like not fully understanding the details of a possible solutions, don’t you agree? That’s why I decided to write the following blog to bring more light to the subject of hard money “POINTS”.
Hard money “points” are the fee that the hard money lender or broker will be paid once the loan is either funded or satisfied. “1 point” is equal to “1%” of the total loan amount. Therefore, 4 points on a $100,000 loan = $4,000.
Points are only one of many factors to consider when doing your due diligence. My advice, be very cautious of the “too good to be true”offer ; often time those offers are just that… too good to be true. A better approach is to consider your private / hard money lender as a partner or a trusted adviser who you will pay to help you achieve your specific goal. Look to create a long term relationship with you Private / hard money lender, based on trust. I always encourage my clients to check out my core values and mission statement to get a better understanding of who I am as a person and how I approach my business. For my best clients, my core values and mission statement resonate and often times become the foundation of our relationship.
If you have any questions about how a private or hard money lender is paid please contact me and I’d be happy to talk with you about your specific situation.
Until then, dream big & take action
Joe
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