A hard money loan is a short-term real estate loan made mainly on the property, not on your paycheck or credit history. "Private" describes where the money comes from: private capital instead of a bank. "Hard money" describes how the loan is made: against the real estate. At Northwest Private Lending, every borrower sees the same published pricing.
What is the difference between private money and hard money?
Private money describes the source of the capital: cash from private individuals rather than a bank. Hard money describes the kind of loan: an asset-based loan, where the lender looks first at the property and the equity in it. Most of the loans we make are both, which is why people use the two terms interchangeably.
What does a hard money lender look at?
We look first at the property, the equity in it, and your plan to repay. One question we ask is this: if the market dropped 30%, could the property still be sold and protect the money lent? That is how we think about risk, not a fixed rule or a guarantee. Because the loan rests on the property, situations that can stop a bank loan, such as a new job, a gap in work, a divorce, or a past bankruptcy, do not automatically rule you out. We still review the whole picture, and every loan follows the state and federal lending laws that apply to it. For how points, LTV, interest-only, and maturity work, see common hard money loan terms.
How is that different from a bank or conventional loan?
Many bank and conventional loans are written to set guidelines so they can be sold or insured, so the borrower and the property have to fit a box. Our loans are not packaged to be resold, so we can make an individual decision on a property or a situation that a bank's guidelines would not fit. That flexibility still works within the lending laws that apply, including consumer, occupancy, and licensing rules. Our conventional versus hard money FAQ walks through the comparison.
Why does a hard money loan cost more than a bank loan?
Our loans are funded with private capital that stays at risk for the life of the loan, with no government insurance on repayment. That is why a hard money loan costs more than a 30-year mortgage. We publish one price list for every borrower. Loan origination is 3 points (3% of the loan amount) with a $2,500 minimum. Interest is 1% per month (12% a year), interest-only. The loan document fee is $650 on non-owner-occupied loans, or $850 on owner-occupied loans in Oregon and Idaho. There is no underwriting fee, no required appraisal, $0 in required reserves, never a prepayment penalty, and a $0 extension fee on performing loans. On a $100,000 loan, that is a $3,000 origination fee and about $1,000 a month in interest. On a $500,000 loan, that is a $15,000 origination fee and about $5,000 a month. The full schedule is on What Are NWPL Rates and Terms?.
When does a hard money loan make sense?
A hard money loan is the right tool only when you need it. Two things should be true. First, there is no better bank option. Second, there is meaningful equity in the property or a meaningful down payment. If a bank can make your loan, take the cheaper bank loan. Hard money fits when you need a fast close on an investment property, when a bank will not lend on the house yet, when you are bridging from one property to the next, when you need a short-term cash-out refinance, or when your circumstances do not fit a bank's guidelines right now. See when you should use hard money and pros and cons of hard money.
Can you use hard money on a home you live in?
Owner-occupied loans are available in Oregon and Idaho; in Washington, we make business-purpose loans on non-owner-occupied property only. Owner-occupied loans use the same 3 points and 1% per month, with the $850 document fee, generally a 5-year maturity, and typically close in 7 to 10 business days. Details are on closing costs and owner-occupied loans.
What kinds of property and programs do you fund?
Fix and flip, rehab and refinance, bridge, cash-out, commercial and industrial, 1031 and reverse 1031, acquisition, ITIN, and in-process construction loans, generally from $50,000 to $2,000,000. We do not offer ground-up construction loans. Browse the loans we offer or start with fix and flip and bridge loans.
How do you get a hard money loan with us?
Call or apply, we review the property and your plan, and approval is often same-day. Investor loans typically close in 3 to 5 business days once title and insurance are ready (how fast we close). Call 503-941-5473, Monday through Friday, 9am to 5pm PT. You can also pre-qualify online, apply for a loan, or send us a message.
Who is Northwest Private Lending?
Northwest Private Lending is a family private office that began in 1987 as Clunas Funding Group and rebranded to Northwest Private Lending in 2016. Our offices are in Portland, Boise/Meridian, and Seattle/Bellevue.