Hard money pricing is a mix of points, rate, and execution reliability.
Points are paid upfront at closing, while the rate is the ongoing cost during the hold.
Two offers can look similar on rate but be very different in total cost because of points and fees.
The correct way to compare offers is total dollars over your expected hold time, not a headline number.
Short holds make points more expensive; longer holds make the rate more expensive.
Use this guide to compare offers the way real operators do.
At a glance
- Points are paid at closing; rate accrues over time
- Compare total cost over your expected hold period
- Interest-only structures change the math
- Ask for a fee worksheet early
- If you plan to exit early, points matter more
- If you hold longer, rate matters more
What points are
Points are an origination fee, typically a percentage of the loan amount, paid at closing. Points are separate from interest, and separate from third-party closing costs.
How to compare offers correctly (simple model)
- Estimate your hold period conservatively.
- Convert points into dollars.
- Estimate interest cost over the hold period.
- Add third-party costs.
- Compare total dollars and execution risk.
Example comparison (same loan amount, different mixes)
Assume a 300,000 loan.
Offer A: 2 points + higher rate
- Points cost: 2 percent of 300,000 = 6,000
Offer B: 4 points + lower rate
- Points cost: 4 percent of 300,000 = 12,000
If you expect a short hold, the extra 6,000 in points in Offer B can outweigh a slightly lower rate. If you expect a longer hold, the lower rate can matter more. The right answer depends on your timeline and exit reliability.
What investors often miss
- Third-party costs can be meaningful: title, escrow, recording, insurance, valuation.
- A slightly cheaper offer that fails to close on time can be the most expensive option.
- Terms that look good on paper can come with slow draw processes, unclear conditions, or late changes.
Next step
Hard money program: https://ambitionlending.co/hard-money-loans/
Submit a deal for a clean quote: https://ambitionlending.co/contact/
Frequently Asked Questions
Are points negotiable?
Sometimes. It depends on deal strength, leverage, and lender appetite. Strong files and repeat borrowers often have more flexibility.
Is a lower rate always better?
Not necessarily. If points and fees are higher or execution is slower, total cost and project risk can be worse.
How do I model cost on an interest-only loan?
Model points as an upfront dollar cost at closing, then model monthly interest cost over your expected hold.
Do points replace closing costs?
No. Points are lender fees. Closing costs include third-party costs such as title, escrow, recording, insurance, and valuation when required.
Why do some loans have higher points but lower rates?
It is a pricing mix. Lenders can shift cost between upfront fees and ongoing rate.
What should I ask for before committing?
Ask for a written fee worksheet and the conditions required to close.
Hard Money Loans: https://ambitionlending.co/hard-money-loans/
FAQ: https://ambitionlending.co/faq/
Contact: https://ambitionlending.co/
