Note: These are estimate numbers that may vary depending on the terms set by both parties (lender and borrower).
Some basic terms you should know
When negotiating a hard money loan you can find certain terms or abbreviations such as:
LTV: stands for Loan to Value. This is the amount of money you get from a hard money lender in comparison to the total value of the property.
LTC: stands for Loan to Cost. It’s the total cost of the project that hard money lenders consider to make a decision on how much money they will lend to the borrower.
ARV: stands for After Repair Value. This is the total value of the property once all the renovations have been made. It’s commonly used on fix and flip hard money loans.
Origination fees: these are fees charged directly by the hard money lender as a requirement to access a loan
Using a loan calculator is a really convenient tool, especially for those who are just getting started with hard money loans. Setting goals and having a clear overview of the terms and numbers is key. This is something that you have to be comfortable with from the beginning. Ultimately, it’s what will lead to a successful project.