The Quick Read: The terms in your note and deed of trust control the loan, and they do not change just because the lender sells the loan or hands servicing to a new company. What changes is who you pay and where you send payoff requests, extension requests, and notices.
- A sale changes who owns the debt. A servicing transfer changes who collects payments. They are separate events.
- The rate, maturity, fees, and prepayment terms come from the signed documents, not from the buyer.
- Business-purpose loans generally sit outside the consumer notice rules, so a formal notice is not guaranteed.
- Get payment instructions in writing, and verify them against the original documents before you send money.
- Check the assignment, extension, and notice clauses before you close, not after a transfer.
What Are Hard Money Loan Terms, and Where Do They Live?
Hard money loan terms are the contract provisions that define the loan: the amount, the interest-only structure, the maturity, fees, draw rules, extension rights, and what happens on default. They live in the promissory note, the loan agreement, and the deed of trust.
What this loan actually costs to carry.
Hard money is sized against the project and priced by time. Enter the deal and see how much the program will lend, the cash required at closing, the carry while you hold it, and what is left at the exit.
Leverage tiers on the current program: 85% with fewer than 2, 90% with 2 or more, 93% with 5 or more completed projects — every tier capped at 75% of after-repair value. Loan amounts up to $5,000,000, larger by exception; terms of 6 to 18 months, interest-only, no prepayment penalty. The rehab portion funds in draws against completed work, not at closing.
Program parameters shown update from Lendmire’s centralized guideline source. Rate, points, and months are editable assumptions, not quoted terms.
Cost cap sets the loan · positive spread
Illustrative estimate only — not a quote, Loan Estimate, approval, or commitment to lend. Rate, points, and months are editable assumptions. Hard money is business-purpose financing for real estate investors, not a consumer mortgage. Leverage on the current program tops out at 93% of project cost for investors with a documented track record, capped at 75% of after-repair value, with rehab funding up to 100% of the documented budget released in draws; actual terms vary by lender, borrower experience, property, and exit. Lendmire is a mortgage broker, not a lender.
Across the lenders Lendmire works with, the typical program for investors is short and asset-based. The structures below are typical, and they vary by lender, property, and experience. Nothing here is a commitment to lend.
| Term | Typical structure | Where it lives |
|---|---|---|
| Loan term | 6-18 months, interest-only | Note |
| Prepayment | No penalty | Note |
| Fix-and-flip leverage | 85%-93% of project cost, capped at 75% of after-repair value | Loan agreement |
| Rehab funds | Up to 100% of the rehab budget, released in draws | Loan agreement |
| Bridge purchase | Up to 80% of purchase price | Loan agreement |
| Refinance | Up to 65% of value | Loan agreement |
The top leverage tier is reserved for investors with several completed projects. Credit starts around a 620 score, with added conditions below 660, but underwriting stays focused on the property, the plan, and the exit.
Hard money is a business-purpose product for non-owner-occupied 1-4 unit properties. Because of that, it is reviewed differently from a standard owner-occupied mortgage. That distinction matters a great deal in the rest of this article.
Sale vs. Servicing Transfer: Two Different Events
A loan sale moves ownership of the note to a new holder. A servicing transfer moves the job of collecting payments and managing the account to a new company. Either can happen without the other, and neither rewrites your contract.
Nolo draws this same line. A loan can be sold while the original company keeps servicing it, and the reverse is also possible.
| Item | Loan sale | Servicing transfer |
|---|---|---|
| What moves | Ownership of the debt | Payment collection and account work |
| Who you pay | May stay the same | Changes |
| Who you call for payoff | Depends on servicer | The new servicer |
| Do the terms change? | No, the note controls | No, the note controls |
In practice, you may see both at once. A private lender funds your bridge loan, sells it to an investor, and a third-party servicer takes over the account. Your note still reads exactly as signed.
What Stays the Same and What Changes
The rate, interest-only structure, maturity date, fees, and prepayment terms stay as written. What changes is logistics: payment address, portal, autopay setup, and who issues payoff statements. A buyer steps into the original lender’s position and gets no right to rewrite the deal.
The mechanics run in a predictable order:
1. The note is endorsed and delivered, with an assignment agreement.
2. The deed of trust or mortgage is typically assigned and usually recorded.
3. A servicer, new or old, administers payments, payoff statements, draws, and default handling under the original terms.
Each of those steps is administrative. If someone says a change is “because of the transfer,” ask which note provision supports it. If none does, the change has no basis.
Do Hard Money Borrowers Get a Transfer Notice?
Not necessarily. Consumer mortgage servicing rules require advance notice, but hard money loans are usually business-purpose loans, which are generally exempt from those rules. Your protection comes mainly from your contract.
For consumer-purpose loans, 12 CFR 1024.33 requires both the old servicer and the new servicer to send notice of a servicing transfer, with timing set by the rule. The notice must state that the transfer affects no loan term other than those directly related to servicing.
The business-purpose exemption appears in the CFPB’s Regulation X summary and in the Federal Reserve’s copy of the rule. So the consumer notice, and the 60-day late-payment protection that comes with the model form, should not be assumed to apply to your loan.
Two cautions. A business-purpose label is not a free pass for the lender, because the test turns on the loan’s actual purpose. And your loan agreement may still require notice or set its own rules. Read it.
Where the General Rule Breaks
The “terms don’t change” rule holds firmly. The edge cases are about practical friction and legal posture, not rewritten terms.
Disputes with the original lender. If a note is negotiable and a buyer takes it for value, in good faith, and without notice of defects, the buyer may take it free of many defenses you had against the original lender. A dispute over a rehab draw, for example, may not carry over cleanly. Raise and document disputes early, in writing.
Draws and holdbacks mid-project. Rehab funds released against completed work are set by the loan agreement. A new servicer administers them, but inspection routines and contacts may change. Confirm the process with the new servicer before your next draw request.
Extensions. Whether you can extend at maturity depends on the extension clause and the holder’s discretion. If the note makes extension discretionary, a new holder may handle requests differently than the original lender did. Know that before the maturity date approaches.
Payoff and lien release. The payoff letter comes from whoever services the loan, and the title company usually requests it at a sale or refinance. A servicer change right before payoff can add friction. Some states set deadlines for releasing the lien after payoff, and those rules vary by state.
Optional insurance and escrow. If your loan has escrowed items or lender-placed coverage, confirm how the new servicer handles them.
Scams. A fake “your loan was sold” message that redirects payments is a real fraud pattern. Never change where you send money based on an email alone.
What the Investor Decision Looks Like in Practice
Take a fix-and-flip or bridge borrower with a 12-month term and a planned refinance. The decision is not whether the terms will change. It is how to keep the exit clean if the loan changes hands.
Before closing, check four clauses: assignment (can the lender sell without your consent), servicing (who may service and how you are told), notice (how and where notices must be sent), and extension (who decides, and on what conditions).
After a transfer, do these things:
- Get new payment instructions in writing, then confirm them with both the old and new servicers.
- Compare any notice against your original loan documents.
- Keep the note, loan agreement, draw records, and proof of every payment.
- Ask the new servicer who issues payoff letters and how to request one.
Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire arranges that path through its network. The servicer’s identity matters here because your title company needs a clean payoff before the new loan funds. Rental coverage, leverage limits, and credit still decide eligibility on the takeout, subject to lender guidelines. Lendmire’s complete DSCR loans guide covers how that long-term step works.
Key Terms Defined
Holder: The person or entity that currently owns the note and has the right to enforce it.
Servicer: The company that collects payments, issues payoff statements, and manages the account day to day.
Assignment: The legal transfer of the note or deed of trust from one party to another.
Acceleration: A clause that lets the holder demand the full balance after a default.
Due-on-sale: A clause that lets the lender demand payoff if you transfer the property.
Holder in due course: A buyer of a negotiable note who may take it free of many borrower defenses against the original lender.
Frequently Asked Questions
Can a hard money lender sell my loan without my consent?
Usually yes, unless your documents say otherwise. Notes are generally transferable assets, and many loan agreements permit assignment. Check the assignment clause before you sign, because that is where any consent requirement would appear.
Will my maturity date or extension rights change after a sale?
The written maturity date and extension clause stay the same. In practice, a discretionary extension may be handled differently by a new holder. If extension matters to your exit, ask for the extension terms in writing and plan the payoff or takeout early.
Who do I pay if the servicer changes?
Pay whoever your written instructions name, after verifying them against your documents. Confirm with both the old and new servicers. Do not rely on an email or text alone, because redirect scams are common.
What if I send a payment to the old servicer by mistake?
Document it and contact both servicers right away. Consumer-loan rules include a 60-day protection for this situation, but business-purpose hard money loans are generally outside those rules, so do not assume it applies. Your loan agreement and proof of payment are your best protection.
Does a servicing change affect my planned DSCR refinance?
It affects logistics, not eligibility. The servicer issues the payoff letter, so confirm who that is early. Whether you qualify for the takeout depends on rental coverage, leverage, credit, and property review under lender guidelines.
If you are buying, rehabbing or refinancing an investment property on a short timeline and want to see how the numbers work, Lendmire can help you compare hard money options based on the project, the exit plan, leverage, and your goals. Programs, leverage, and eligibility vary by lender, property, and experience, and nothing here is a commitment to lend.
About Lendmire
A non-QM mortgage broker (NMLS# 2371349), Lendmire arranges DSCR financing for real estate investors in 41 markets — 40 states plus Washington, D.C. Because deals are underwritten primarily on property cash flow rather than personal income documentation, the structure suits self-employed buyers and entity-owned portfolios. Lendmire places loans through wholesale investor lenders; it is not a direct lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Hard money often opens the deal, and a refinance typically closes the chapter – see the hard money loan overview.
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Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. Nolo, Notification rules when mortgage loans are transferred
2. CFPB, 12 CFR 1024.33 — Mortgage servicing transfers
3. CFPB, Regulation X (RESPA) summary
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can a Hard Money Loan Pay Off a Land Contract on a Rental? · How a Lender Counts a Higher Insurance Premium on a Hard Money Loan · How to Close a Hard Money Loan in a Community-Property State
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.