Interest Rates 101

hard money lenders in Florida

Any time you take out a loan, there will be an interest rate, especially if the loan comes from a private lender or a bank. Interest rates will impact the cost of loans, even through hard money lenders in Florida. They are the calculated percentage of the amount borrowed or saved, as determined by the lender. Interest rates can be quoted as an annual rate or can be calculated for extended periods of time. 

Interest rates are applied to the total unpaid part of your loan. Interest rates are competitive but not always the same and can vary from institution to institution. 

Many lenders issue interest compounded, which are the interest amounts that grow at a faster pace. Interest is earned when money is either borrowed or deposited into an interest-earning account. 

Compound interest is a little different – it is the interest that occurs when you rack up interest on what has been previously earned. For this reason, banks may add the interest earnings on a day-to-day basis rather than a yearly one. Private lenders tend to do this differently, so if you are seeking out a loan through them, you will need to discuss loan-specific terms with your loan advisor. 

Generally, the faster you pay off the loan, the less total interest that will be paid. 

However, hard money loans and interest rates may operate a bit differently. Typically, interest rates are lower for those with great credit scores, but certain hard money lenders do not require personal qualifications. 

Ultimately, interest rates will depend on both the lender and the type of loan.