Tag Archive for: interest rates

How to Get the Best Rates for a Hard Money Loan

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Today we are going to discuss how to get the best rates for a hard money loan! Let’s talk about the truth about hard money rates. More importantly, let’s talk about how you can save real money on them.

After all, many investors wonder why two people send in the same deal, yet one gets better rates, better terms, and faster closings. The good news is this isn’t luck. Instead, it’s about preparation, fit, and presentation.

Let’s break it down step by step.

Why Hard Money Rates Are All Over the Place

First of all, hard money is not a bank loan.

Because of that, rates do not come from one big Wall Street rulebook. Instead, every lender sets their own guidelines. As a result, you may see one lender offer 9.5% while another offers 13.5% on the same deal.

At the same time, one lender may cap you at 70% LTV, while another offers 75% of ARV.

However, here’s the key point: most of the pricing comes down to you and your deal.

So yes, shopping around matters. Even more important, learning how to attract better terms matters even more.

Understand This First: Hard Money Is a Segmented Market

Before anything else, you need to know this:
Every hard money lender has their own bucket of money.

Because of that:

  • Each lender has different rules

  • Each lender wants different types of deals

  • Each lender tightens up when their money runs low

So, when one lender pulls back, another may still be aggressive. That’s why understanding the market helps you land better terms faster.

The 4 Biggest Mistakes That Drive Up Your Rates

Now, let’s look at the mistakes that quietly cost investors thousands.

1. Not Having Your Numbers Ready

First and foremost, lenders want to know you understand your deal frontwards and backwards.

So before you submit anything, make sure you know:

  • Purchase price

  • ARV

  • Scope of work

  • Rehab budget

  • Timeline

For example, when you clearly explain your numbers, you signal confidence. Because of that, lenders often move faster and sharpen their terms. On the other hand, when numbers feel fuzzy, your deal often drops to the bottom of the pile.

Preparation matters.

2. Not Showing Enough Liquidity

Next, liquidity plays a big role in hard money underwriting.

Why? Because lenders want to know:

  • You can make payments

  • You can handle surprises

  • You won’t stall the project

For instance, if an unexpected repair pops up, liquidity keeps the project moving. As a result, lenders feel safer, which often leads to better pricing.

3. Missing the Mark on ARV

Just as important, your ARV must be spot-on.

That means:

  • Using nearby comps

  • Matching square footage

  • Matching beds, baths, and garages

  • Staying in the same property type

Remember, appraisers follow national standards. So if your comps stretch too far, your deal weakens. However, when your ARV makes sense, lenders gain confidence. And when you buy right, you can fix almost anything that comes later.

4. Not Knowing the Lender’s Sweet Spot

Finally, many investors send good deals to the wrong lender.

Some lenders prefer:

  • Small commercial

  • Condos

  • Rural properties

  • City-center homes

  • Small loan sizes

  • Large loan sizes

So before you submit, ask yourself: Does this deal match what this lender likes?
When it does, rates and terms often improve. When it doesn’t, pricing usually gets worse, or the deal gets declined.

How Hard Money Lenders Actually Price Deals

Now let’s talk about how lenders really think.

In simple terms, pricing depends on:

  • Your experience

  • The deal fit

  • Available capital

  • Loan size

  • Clean documentation

For example, when lenders have extra money to place, pricing often improves. Meanwhile, when money is tight, lenders get picky.

Most importantly, lenders focus on math—not emotion. They want:

  • Interest paid on time

  • Clean exits

  • Fast turnover to the next deal

So the easier you make that process, the better your leverage becomes.

Rates, LTV, and How to Lower Your Costs

Here’s another powerful lever: loan-to-value.

When you reduce lender risk, rates usually drop.

For instance:

  • Putting in 10–25% down often improves terms

  • Covering repairs yourself can lower rates

  • Using outside funds reduces points and interest

At the same time, tools like HELOCs or 0% credit cards can lower your blended cost. For example, borrowing repairs at 7.5% with no points often beats paying 10–12% plus points through hard money.

So always ask lenders:

  • What happens at 10% down?

  • What happens at 20% down?

  • What if I cover the rehab?

Then compare the total cost. Small changes add up fast.

Hard Money vs Banks: Know the Difference

Of course, banks offer lower rates. However, they also require:

  • Tax returns

  • Work history

  • Long approval timelines

In contrast, hard money costs more on paper but offers:

  • Faster closings

  • Higher LTVs

  • Flexible property types

  • Creative structures

Because of that, hard money can actually save you money when speed, flexibility, or deal certainty matters.

How to Get the Best Deal Every Time

To wrap this up, getting the best hard money rates comes down to this:

  • Know your numbers

  • Match the right lender

  • Reduce risk where possible

  • Present a clean, clear deal

When lenders see a solid plan, they respond with better terms.

And finally, if you want help comparing options, use a Loan Cost Optimizer. It lets you compare multiple scenarios side by side, so you can see the true cost of each option.

Because in the end, every deal is different. And the investor who compares wins.

Bottom line:

Shop every deal. Prepare every file. And always know your numbers. That’s how you stay on the fast track and keep more money in your pocket.

Watch our most recent video to find out more about: How to Get the Best Rates for a Hard Money Loan

Download our free Loan Optimizer, to see which loan option is best for you!

The Importance of Finding the Best Interest Rate

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Today we are going to discuss the importance of finding the best interest rate. When it comes to loans, the interest rate is more than just a number, it’s the key to saving money. Even a small difference in rates can add up over time. For example, on a $200,000 loan, an interest rate of 6% versus 7% could mean saving hundreds of dollars each month. Over the life of the loan, that adds up to thousands!

Think about it this way: finding the best rate is like shopping for the best price on a car or a new TV. You wouldn’t buy the first option without checking for better deals. The same idea applies to your loan. The better the rate, the less you’ll spend overall.

But it’s not just about saving money, it’s also about reaching your financial goals faster. Lower interest rates mean smaller payments, freeing up your cash for other investments or expenses.

Take Sarah, for example. She’s an investor who found a property she loves. By shopping for the best rate, she saved $150 a month on her loan. That extra cash helped her renovate the property and increase its value.

The right interest rate can make a big difference. It’s worth the time to shop around, compare options, and get the deal that works best for you. Your wallet, and your future, will thank you.

Contact Us Today! 

What type of financing is right for you? Contact us today to find out more about real estate investment loans!

Free Tools For You! 

We also have free tools available! Download the Loan Optimizer to compare financing options side by side!  

Learn more!

Visit our YouTube channel to learn more about real estate investing and how you can get on the fast track to success! 

2025 Outlook: Here’s What Real Estate Investors Should Focus On

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Today we are going to discuss the 2025 outlook at what real estate investors should focus on in the upcoming year. The success of real estate investing in 2025 hinges on one major factor: interest rates. Whether you’re flipping houses or selling rental properties, understanding how these rates influence buyer behavior will be critical. Let’s dive into what to expect and where to focus.

Why Buyer Interest Rates Matter Most

While many investors focus on their own loan rates—hard money, private money, or bridge loans—it’s the consumer interest rates that drive the market. These rates determine how many people can afford your property and how much they’re willing to pay.

Example: Expanding the Buyer Pool

A buyer with a $2,800 monthly budget can afford the following based on interest rates:

  • 7.5% rate: Qualifies for a $400,000 purchase.
  • 6.5% rate: Qualifies for a $440,000 purchase.
  • 5.5% rate: Qualifies for a $490,000 purchase.

As interest rates drop, the pool of qualified buyers grows. That means more competition for your property and a higher chance of selling at your asking price—or more.

How Hard Money Rates Impact You

Hard money and private loan rates are largely influenced by the Federal Reserve’s actions. However, these changes have a minimal effect on your overall profits. Here’s why:

Example: Hard Money Rate Changes

Let’s say you have a $300,000 fix-and-flip loan for six months. If interest rates drop by 1%, your savings amount to just $1,500 over the life of the loan. While helpful, this doesn’t compare to the potential gains from a larger buyer pool driven by lower consumer rates.

Affordability and Buyer Demand

Lower rates don’t just increase the number of potential buyers; they also make higher-priced homes more attainable. Buyers qualify for mortgages based on their income, and lower rates reduce the income required to afford the same purchase price.

Example: Income Requirements

A $400,000 purchase requires the following income levels based on rates:

  • 7.5% rate: Buyer needs an annual income of $96,000.
  • 6.5% rate: Buyer needs an annual income of $84,000.
  • 5.5% rate: Buyer needs an annual income of $78,000.

As rates fall, more families and individuals meet these qualifications, boosting demand for homes at various price points.

2025 Interest Rate Projections

The National Association of Realtors (NAR) predicts rates will hover between 5.5% and 6.2%, while some forecasts range from 6.2% to 7.2%. If rates reach the lower end of these projections, it could mean significant opportunities for investors.

How to Prepare for 2025

  1. Stay Updated on Rate Trends: Interest rates will fluctuate throughout the year. Watch closely to time your listings and sales effectively.
  2. Understand Affordability: Analyze how rate changes impact your buyers’ ability to qualify for loans.
  3. Position Properties Strategically: Ensure your homes are ready to list when rates dip, maximizing demand and competition.

Looking Ahead

2025 offers both challenges and opportunities for real estate investors. By focusing on consumer interest rates and understanding their impact, you’ll position yourself to thrive. A larger buyer pool means better sales outcomes, more profit, and a strong year ahead.

Here’s to making 2025 your most successful year yet!

Contact us today to find out how you can make 2025 the best investment year ever!

Watch our most recent video to find out more about: 2025 Outlook: Here’s What Real Estate Investors Should Focus On

The $1.8 Million Dollar Mistake: DSCR Loan Interest Rates

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DSCR loan interest rates vary like crazy. Here’s exactly how to avoid a costly mistake.

DSCR loans are unlike any other loan out there.

Traditional loans are standard – every lender will have the same interest rates, terms, points, and closing costs. There is one system, one set of brackets that decides loan prices, and one approval process.

Not so with DSCR loan interest rates and other terms. This style of loan is the Wild West of underwriting.

With so much variance between DSCR loans, it’s more important than usual to shop between lenders. Let’s go over the $1.8 million mistake some investors make with DSCR loan interest rates.

Current DSCR Loan Interest Rates

We’d like to share a couple of examples we see in the DSCR loan world.

As a mortgage broker, we have a program that allows us to look at different rates from different companies. Every day, 10 to 15 different lenders put their rates on this search engine.

We search the same information daily to get a picture of the rates on these loans. We put the same:

  • Credit score
  • Debt service coverage ratio
  • Loan-to-value

Yet every lender offers a different rate. On the same 30-year DSCR loan, interest rates have looked like this:

  • The best: 7.04%
  • The worst: 9.46%
  • The average: 7.9% – 8.25%

These differences are not based on credit score, experience, property size or type, or debt ratio. These are the options for the same person calling around for the same deal. They could find anywhere between 7.04% and 9.46% – all depending on the lender.

The DSCR loan market is extremely segmented. And that is why it’s vital to shop around.

We want to break down the difference in DSCR loan interest rates for you. How much money do you lose on the worst DSCR interest rate vs the best?

How Much Different Interest Rates Cost You

Let’s say we have a $300,000 deal we want a DSCR loan for. We’ll look at 3 common interest rates: the high end (9.46%), the low end (7.04%), and the average (7.99%).

In this example, we have the same credit score, same rent income, same property expenses, and the same loan amount. These interest rate differences are purely about the lenders we’re using.

Low-End DSCR Interest Rates

With the lowest available rate, 7.04%, on a $300k, 30-year loan, payments are $2,003.

At the exact same time, with the exact same parameters, a 7.99% interest rate (average range) has payments of $2,199.

So, this is a difference of $195. Doesn’t seem like a big deal? If your rent is $2,100, a lower rate could mean the difference between positive cash flow and negative – or qualifying for the DSCR loan or not.

High-End DSCR Interest Rates

What’s this comparison at the other extreme?

Lenders with higher DSCR loan interest rates are usually the ones who take advantage of the segmented nature of this market. They raise their rates high, then raise their marketing budget too. They push their product hard to be the first option borrowers see; when they don’t shop around, they’ll settle for the higher rate.

And with this higher rate, a 9.46%, your monthly payment would be $2,513. That’s $509 more per month than the lender with the 7.04% rate!

All for the same property, same LTV, same credit score, but different lender.

Impact on Real Estate Investors

The monthly cash flow difference from DSCR loan interest rates will hurt everyone’s pockets. However, it’s especially rough for investors. What happens if you have three properties? Five? Ten?

If you got stuck with a 7.99% rate for all of your investments (rather than 7.04%), that’s $70k extra in interest over the life of the loan. How does that multiply with more investment properties?

  • 3 properties → $210k extra in interest
  • 5 properties → $350k extra in interest
  • 10 properties → $700k extra in interest

Let’s make the same comparison with the higher-end interest rate of 9.46% compared to the low-end 7.04%. Over the life of the loans you’d be paying:

  • 3 properties → $550k extra in interest
  • 5 properties → $917k extra in interest
  • 10 properties → $1.8M extra in interest

That money is all additional interest that could have been avoided. It’s going into the bankers’ pockets because you didn’t shop around for a better rate that’s easily available.

But what exactly do we mean when we say shop around?

How to Shop Around for DSCR Loan Interest Rates

The spreads on DSCR loans are large. But shopping around for any large purchase is no fun.

When you’re talking with any sort of salesperson, it’s nerve-wracking to not know whether they have your best interest in mind. What if you don’t know what questions to ask to get the right information? What if they try to take advantage of you?

We want to give you a couple of questions to ask to get the information you need to make an informed decision on your DSCR loans.

Questions to Ask DSCR Lenders

Firstly, a piece of advice: if a company won’t quote you a general range in a simple phone call, then keep calling. Find the ones that will.

Secondly, prepare all of your information ahead of time, and be sure to give every lender the same information. You’ll want to have the following information ready before you contact anyone:

  • LTV
  • Credit score
  • Is it a purchase or refinance?
  • Zip code of the property
  • Type of property (single-family, duplex, etc)
  • Rent (or estimated rent)

Next, you’ll want to have a set of questions to ask each lender. Even if you don’t have the property yet, coming with a specific example gives you an idea of who the good lenders are.

What to ask DSCR loan lenders:

  • What interest rate could I get?
  • Is there a prepay penalty? How long is it and how much? (The pricing of a 5-year prepay will always be better than a shorter-term prepay. But if you know you’ll want to sell the property within three years, you’ll need to keep a shorter prepay in mind).
  • What are your closing costs?
  • What’s your appraisal process for underwriting?
  • Is this a 30-year product? 40-year? Interest-only?

How to Analyze the Price of Different Lenders

Now, once you have all the information and numbers from your different lenders, you have to make sure you’re comparing apples to apples. One lender may have a lower interest rate but an extra 1-2 points.

What’s important is the final number you’ll have to pay. You can download our free analyzer here for an easy way to figure that out.

We want to get you the lowest rate to keep your investment business turning. Rates have been fluctuating like crazy, though. 

If you want a regular report on conventional and DSCR loan interest rates, LTVs, credit requirements, and more, ask us about it at Info@HardMoneyMike.com.

Happy Investing.

7 Ways to Get the Best Rate on a Hard Money Loan In This Market

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Interest rates can make or break your REI project. Here’s how to get the best rate on a hard money loan.

Investing is a leverage game.

You need other people’s money to make money – but that doesn’t mean you have to overpay for that money. 

Let’s take a look at how to get the best rate on hard money loans in the current environment.

What Is Hard Money?

Hard money is sometimes called asset-based lending, or private money.

Hard money is a form of leverage focused on the property. All lenders have criteria they require from borrowers. For hard money lenders, the main lending requirement is about the property and project itself.

Lender Niches Will Affect Your Rates

Investors have their own niches, their own likes and wants for their investment experience. Maybe someone doesn’t want rural properties, someone else focuses only on high-end houses, another on low price points.

Lenders have individual likes and dislikes the same way. Every lender draws a box of what they like to lend for. The more your property fits in their box, the better rate they’ll give you.

This means that not all lenders will want your particular project – or that they won’t give you the best rate on your hard money loan. It’s not personal. Not every project will fit in every lender’s “box.”

If you want the best rate, then you’ll have to find the lender that likes your project, your experience, and your property.

Types of Private Money

There are three types of lenders that make up the private lending world: local, national, and OPM.

  • Local Lenders: Lend regionally, in your state or city only.
  • National Lenders: Backed by Wall Street hedge funds. They lend all throughout the US.
  • Real OPM: Other People’s Money. A private loan from someone you know..

The best rate on a hard money loan will vary lender to lender, depending on the type of institution and their preferences. One lender might do land loans, but another won’t. One may offer great rates on new builds but not even offer scrapes.

Whatever your project, it’s important to find a lender that matches you. The closer you match a lender’s preferences, the better your rate.

Despite all these differences between lenders, there are some general rules between the three types of hard money.

Real OPM

The best possible rates come from OPM. A friend, family member, or other investor who wants a safe place to put their money will cost you a lot less than a formal lending institution.

You save on cost with an OPM loan because there are no points, fees, or appraisals. Every institution will charge you these extra on your loan.

OPM also saves you the most on interest rate. The interest rate criteria for most OPM lenders is, “more than they could get in an IRA.” Typically with OPM, interest rates are 3-4% less than other lenders.

National and Local Hard Money Lenders

Both local and national lenders will have similar pricing, for the most part.

Rates for these lenders depend on what they’re looking for in their portfolio. Now, in late 2022 to 2023, most lenders’ rates will be between 9-12%.

One difference, however, is that local lenders tend to not have extra underwriting and appraisal fees.

Shopping Around to Get the Best Rate on a Hard Money Loan

The best rates aren’t going to come to you. You’ll have to shop around to find the best lender for each of your projects.

Talk with lenders in your area and get estimates for loan costs. Then, you can use our free Loan Optimizer tool to quickly compare lenders and find out who’s cheapest.

Lowering Risk to Get the Best Rate on a Hard Money Loan

To get the best rate on a hard money loan, think of it from the lender’s perspective. They want to lend to people who are low risk. Therefore, the less risk you pose, the better your rates become.

So how do you lower the risk? Here are 7 ways you can lower your risk to get a better rate from a lender.

1. Straight Talk

Firstly, be able to back up everything you tell your lender. No lender wants to be in a position where they have to try and figure out what’s true and what’s not.

If you do this, lenders will put you at the end of their long line of waiting borrowers – or they’ll increase your cost.

Give them all the information they need. Be honest about everything – even the ugly parts of your credit or investment history. If you think your rate will be worse if they knew the full store, just remember… It’ll be even worse if they find out you hid it.

2. LTV

The lower the loan amount on a property, the less risk for the lender. The less risk for the lender, the more likely they’re going to give you a better rate.

Putting more money down results in a lower rate overall.

3. Experience

If you can show a lender that you’ve had success flipping houses, building homes, or developing land, you pose less risk. Investors with projects under their belt usually see lower interest rates.

4. Credit

National lenders (hedge funds) use credit as one of their main criteria for rates. The better your credit, the better the interest rate they can offer you.

The difference between a 640 score and a 740 could be a difference of 1-1.5% on your interest rate.

Local lenders and OPM lenders don’t consider your credit score as a major requirement. They will look at your credit, but only to make sure you’re not defaulting or have a foreclosure or bankruptcy.

5. Property & Project Types

As mentioned before, each lender has a real estate niche. If your project fits in their box, you can catch a bit of a break on the interest rate. If it does not fit in their box, they may still lend to you, but they can charge you a little more, making your project less profitable.

6. Loan Size

Some lenders won’t lend under a certain amount.

Hedge funds often dislike smaller loans. Some won’t lend under $100,000 – some have a threshold at $500,000.

Smaller loans, like $25k or $50k, are more suitable for OPM. OPM lenders often have smaller available reserves to lend.

7. Location

Local lenders tend to have a specific region of service. National lenders tend to only loan in metropolitan areas. And OPM lenders tend to be more flexible.

But again, each individual lender will have their own preferences. To get the best rate on a hard money loan, find out the lender whose box you best fit in.

The Truth About How to Get the Best Rate on a Hard Money Loan

If you want the best interest rate on a private loan, you really need to shop around.

There’s money in the money, and the less you have to pay for leverage, the more successful your real estate investing career becomes. Hard money is a powerful investing tool, but the wrong interest rate can destroy your project.

You can download our Loan Optimizer here. Send us an email at Info@HardMoneyMike.com if you have any other questions about how to find the right hard money loan. And check out our YouTube channel for more free real estate investing information.

Happy Investing.