Private Money Earnings Beyond Interest
Are you interested in learning more about hard money earnings beyond interest? For example, did you know private lenders also earn money from loan fees ? The interest charged to the borrower for using the funds is the most typical source of earnings for a private or hard money loan investment. However, other possible revenue streams and methods to arrange loan agreements might result in a higher return than the interest rate listed on the promissory note. In addition, loan fees and deal structure can impact the return on investment in a hard money note. Fees Fees might be applied up front, upon loan origination, or over the life of the loan. The following are standard fees in which investors participate: Points The borrower pays points on a private money loan as part of their closing loan fees. As a yield improvement, it is usual for an investor to want .5% to 1% of the loan total. Underwriting Loan Fees A l oan doc or underwriting fee is charged to the borrower to draw up the n...