Getting a hard money loan in North Carolina is relatively easy compared to traditional financing since the approval process is based more on the property’s value or viability of the overall project rather than credit and income history.  Most lenders will require down payment funds, a clear repayment or exit strategy to repay the loan.   The interest rates might be slightly higher than a bank (e.g., 12-14%).  The approval process and overall transaction are usually much faster than a bank (ex.. a few days instead of a few weeks)

When looking for a hard money lender in North Carolina, compare their reputation, location, and loan terms.  It makes sence to work with a local or regional company that knows your market.   Referrals from other investors are a great way to find hard money lenders or private lenders.   Most lenders attend real estate investor groups and Meetup groups.  Mortgage Brokers work with direct lenders or you can ask Real Estate Agents, and Title Companies.  Finally, you can search for ‘hard money lenders near me’ online.   Make sure to check their online reviews and if they are local.  Most hard money lenders are actively involved in helping real estate investors succeed by providing content on youtube, social media or through podcasts.

Hard money lenders require a down payment ranging from 10% to 30% of the property’s purchase price. The exact amount depends on factors like the lender’s risk tolerance, credit score, the loan-to-value (LTV) ratio and the borrower’s experience. In some cases in North Carolina, experienced investors or those securing properties well below market value may negotiate lower down payments or even 100% financing with additional collateral.

Hard money lenders typically do not have minimum credit score requirements, as they prioritize the value and equity of the property over the borrower’s credit history. While some hard money lenders do check credit, it is not the primary factor in their decision-making process, unlike traditional banks. A higher credit score may help borrowers secure better loan terms, such as lower interest rates or reduced down payments. However, even those with low credit can qualify if they have significant collateral (a valuable property) and a strong investment plan demonstrating their ability to successfully complete the project.

In North Carolina Interest rates for hard money loans typically range from 10% to 16%, though they can vary based on factors such as the lender, loan-to-value (LTV) ratio, borrower experience, and credit score. Upfront fees, known as points, generally fall between 2% and 6% of the loan amount. While hard money loans have higher interest rates than traditional mortgages, borrowers can secure lower rates by meeting certain qualifications, such as maintaining a lower LTV ratio.

When presenting a deal to a hard money lender, borrowers should provide information on the property’s value and their ability to execute the project successfully. This includes a clear game plan on what they plan to do with the property along with their desired  loan amount needed,  property’s purchase price, renovation costs, loan purpose and repayment/exit strategy.  Additionally, borrowers should outline their experience in real estate, a detailed investment plan, and an exit strategy, such as selling or refinancing.

Depending on your situation a Hard money lender can be worth using, but they come with pros and cons. They offer fast, asset-based loans with flexible terms, making them ideal for real estate investors, house flippers, and some commercial property owners. However, they often come with higher interest rates, short repayment periods, and additional fees. Whether they are worth it depends on your situation, time frame, credit score and ability to manage the loan’s terms effectively.

Hard money lenders charge points or origination fees that range from 2% to 6% of the loan amount. While hard money loans have higher rates than traditional mortgages, securing a lower rate depends on other qualification factors including lower LTV (Loan to value) ratios.   Hard money lenders should be able to close your transaction within a few business days so paying a little more in origination fees compared to a bank or instituational backed lender might be worth it for a faster and flexible loan.

Most hard money loans require monthly payments which are interest-only payments during the term of the loan and then a balloon payment at the end of the term.

Here are some common payment structures:

• Interest-Only Payments: Common for short-term loans (ex. fix and flip loans) where you pay just the interest each month and the principal at the end.
• Monthly Payments: Amortized loans where you pay both principal and interest monthly.
• Balloon Payments: You may pay only interest monthly and make a lump sum payment of the full principal balance at the end of the loan term.

The payment structure will depend on the lender and the specific loan agreement, so it’s important to clarify the terms before signing.