How Larry Prices Points
Larry keeps it simple: two terms, two point levels, one standard rate. A 6-month loan is 2 points and a 12-month loan is 3 points, the rate is 12.99%, and you pay interest only, so there’s no principal due until you pay the loan off. Interest is charged only on money you’ve actually drawn, not on the full amount approved.
There’s no application fee and no appraisal fee, and if you pay off early there’s no prepayment penalty and no minimum interest waiting for you at the end. Larry’s minimum loan is $100,000.
What That Looks Like on Real Loan Sizes
On a $100,000 loan, interest runs $1,082.50 a month ($100,000 x 12.99% / 12). Hold the 6-month loan to the end and you’ll pay $2,000 in points plus $6,495 in interest, for $8,495 total. The 12-month loan held to the end comes to $3,000 in points plus $12,990 in interest, or $15,990.
Scale it up to $250,000 and the logic doesn’t change, only the numbers. One point is $2,500 and interest is $2,706.25 a month. The full 6-month term costs $5,000 in points plus $16,237.50 in interest, so $21,237.50. The full 12-month term costs $7,500 plus $32,475, which is $39,975.
None of these totals include third-party closing costs like title and recording. They’re points and interest only.
Points Are Paid Once. Interest Isn't.
This is where most of the money gets made or lost.
Say you take a $100,000 loan and pay it off after two months. Interest for those two months is $2,165. If you’d picked the 12-month term, your total is $5,165 ($3,000 in points plus the interest). On the 6-month term it’s $4,165. You borrowed the same money for the same eight weeks and paid $1,000 more for a term you didn’t use.
At $250,000 with a three-month hold, the gap is $2,500. That’s $15,618.75 on the 12-month term versus $13,118.75 on the 6-month.
Because Larry doesn’t charge a prepayment penalty or minimum interest, the early payoff itself never costs you anything extra. The only thing that costs you is choosing more term than the deal needed.
Picking Between 6 and 12 Months
The 12-month loan costs exactly one more point than the 6-month, which works out to $1,000 on every $100,000 you borrow. So the question is pretty direct. Do you honestly expect this deal to take more than six months?
If it’s a quick flip and your contractor has a real schedule, the shorter term usually wins. If you’re waiting on permits, a slow resale market, or a refinance into long-term financing, the longer term can be the safer call. Larry’s loans are also renewable, so starting short and extending is an option. Ask Larry what a renewal costs before you count on it, so you’re comparing real numbers in both directions.
How Draws Change the Math
Since Larry charges interest only on funds you’ve drawn, a loan you take in stages costs less than the same loan funded all at once.
Here’s a rough example. Say you have a $100,000 loan over six months, but you only draw $60,000 for the first three months and the rest after that. Interest comes to $1,948.50 for the first three months and $3,247.50 for the last three, so $5,196 total. Fully funded from day one, the same loan is $6,495 in interest. That’s $1,299 you never pay.
Points are a separate question. Ask whether they’re figured on the full loan amount or only on what you draw, because lenders handle that differently.
Why Lenders Charge Points At All
A hard money loan is short. The lender does the underwriting, the valuation, and the paperwork up front, then might only earn interest for a couple of months before you pay it off. Points are how that up-front work gets paid for, no matter how fast you exit. That’s also why points are usually higher on hard money than on a bank loan that will run for years.
How to compare lenders without getting fooled by the rate
A lower rate isn’t automatically a cheaper loan. A lender with a lower rate and more points can cost you more than one with a higher rate and fewer points, especially if you’re only holding the loan a few months. There’s one way to compare that holds up every time:
Total cost = points + (monthly interest x months you’ll actually hold it) + every other fee
Use the same loan amount and the same realistic hold time for each lender, then ask every one of them the same handful of questions. How many points, and does that change with the term? Are points paid at closing or added to the loan? Are they charged on the full amount or only on draws? Are they charged again on an extension or renewal? And what other fees are there, like application, appraisal, doc, or processing?
What Are Points on a Hard Money Loan FAQ
What is 2 points on a loan?
How do you calculate points on a loan?
Is a loan origination fee the same as points?
What are discount points, and are hard money points the same thing?
Discount points are something mortgage borrowers pay to buy a lower interest rate. Hard money points usually aren’t that. They’re the lender’s fee for making the loan. At Larry the Lender, points are set by the term: 2 for a 6-month loan and 3 for a 12-month loan, at a standard 12.99% rate.
