Hard Money Loans Know The Calculations
                     Hard Money Loans: Know The Calculations
Private hard money lenders offer financing based on real estate collateral. Those hard 
money loans are best for folks who need fast financing for their business growth. It is 
perfect for those who need to close on a real estate deal quickly! The mortgage 
amount or term is typically not fixed. It involves some calculations before finding out 
how creditors calculate hard money loans and their term.
How Do Hard Loans Work?
Do you need real estate financing and wonder whether you qualify for a mortgage? 
Talk to one of the reputed hard money lenders in California and they can help 
walk you through the process. Hard money lenders are typically most concerned 
about the collateral value of the property being secured by the hard money loan. The 
property needs to have enough equity to cover the mortgage amount plus a buffer for 
the lenders security. They are not extremely concerned about your credit scores but 
will require credit to be pulled and any major derogatories to be explained. They will 
also want to know your plans and exit strategy.
A hard money loan typically lasts for between 12 months and 5 years. It can be 
shorter or longer relying on the lender’s guidelines and the borrower’s wishes. 
Seeing that these hard money loans are riskier, you would possibly need to provide 
a down payment (this can have a wide range depending on the deal and structure). 
However, a few lenders provide loans without down payments. These are typically 
structured as JV projects where a borrower is partnering with someone who has 
money, sharing the project essentially. These hard money loans are typically higher 
in rate and cost than traditional loans. However, the benefits of hard money loans 
can outweigh the higher costs.
Factors Influencing Loan Calculations
The calculation for hard money loans is much different than for bank or institutional 
loans. These are collateral-primarily based loans. As such, the value is of paramount 
importance. This is normally determined through an appraisal process. They’ll use a 
professional appraiser to determine the potential property value.
Loan-To-cost
After assessing the value of the property, hard money lenders will decide the loan-to-value 
(LTV) ratio. It’s a ratio of the mortgage quantity to the assets’s value. For instance, if the 
purchase price or value is $200,000, and the lender agrees to lend you $160,000, the LTV ratio 
will be 80%. In hard money loans this loan to value ratio is one of the most important parts of 
the approval process. Since these loans are higher risk due to limited documentation or less 
than ideal credit, there needs to be protective equity in the property for the investor.
Interest rates and Term
Are you concerned about deciding on the right hard money lender in California? Are you 
shopping for the lowest rate? A professional hard money lender in California calculates the rate 
and term after considering the purpose of the loan, property type, and market conditions. 
Length of term can also play a part in this calculation, with longer term loans often requiring 
higher rates. Seeing that hard money loans are higher risk loans, the interest rate calculations 
will most heavily depend on the loan to value ratio. The lower this ratio, the more leverage you 
may have to negotiate a lower rate.
Repayment schedule
The repayment period is also a critical factor that affects the loan calculation. Many hard 
money loans require monthly interest payments, with the full balance due at the end of 
the loan term. Or you could repay the loan amount on an amortized schedule so that the 
loan is paid in full at the end of the decided duration. Some lenders may even build in 
interest reserves to make payments for a period of time. This can be especially true in 
situations where a property needs to be rehabbed or repositioned before being sold or 
rented – helping a borrower not have to worry about additional monthly payments until 
the property is generating cash flow.
The hard money loan amount and terms will vary from lender to lender because it 
involves numerous factors. Working with a reputable and licensed professional is always 
your best bet! All California Landing offers fast, trouble-free hard money loans. They 
have been specializing in these types of loans for over a decade. Contact 
All California Landing today to learn more!
All California Lending
CONTACT
Address- 1145 2nd Street A262, Brentwood, California, 94513, USA
Phone- 877 462 3422
Email- [email protected]
Website- www.acalending.com