Hard Money Basics
How to Read a Hard Money Term Sheet
No jargon and no sales pitch. This is how we explain it at the Averlend desk, with the math that matters.
Hard Money Basics
The short version, then the substance.
Key Takeaways
- The five numbers to find first
- The mechanics that bite people
- Compare total cost, not headlines
The five numbers to find first. Loan amount, rate, points, term, and LTV. Those five define the economics. Everything else is mechanics. Put them in your deal spreadsheet before you fall in love with any single one of them.
The mechanics that bite people. Draw procedures, extension terms, default rate, and prepayment language. Ask how draws are requested and how fast they fund. Ask what an extension costs if the project runs long. The answers tell you what month ten will feel like.
Compare total cost, not headlines. A lower rate with heavy points and slow draws can cost more than a higher rate from a lender who funds draws in days. Model the whole hold period. The cheapest term sheet is the one that gets the project done.
The South Texas angle. Averlend underwrites this every week in San Antonio and across Bexar County. If you are working a deal in Alamo Heights or anywhere else in the metro, the theory above comes with a local desk attached: see our San Antonio lending page or send the deal directly.
Questions
Quick answers from the Averlend desk.
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