Hard Money Loan
Many borrowers are unfamiliar with the term hard money loan. A hard money loan is essentially a real estate loan administered by private individuals. Hard money lenders are frequently very restrictive in approving borrowers. Furthermore, a hard money loan can be punishing to borrowers who default.
LoanNow takes a different approach. Our mission is to provide the money you need along with tools to empower you to improve your overall financial situation.
A hard money loan is often referred to as private money, because of the nature of the loan source. A hard money loan is based on the value of a particular home or piece of real estate. But rather than being based strictly on equity like a mortgage refinance or home equity line of credit (HELOC), a hard money loan will total no more than 70 percent of a home’s value in a repaired condition – its After Repaired Value, or ARV.
Here’s how it works. Let’s say your home is worth 165,000 dollars in its present condition, but needs about 15,000 dollars in renovations. Once the renovations are completed, the value of your house increases to 200,000 dollars. That’s the home’s ARV. You could conceivably obtain a hard money loan for up to 140,000 dollars, which represents 70 percent of your home’s ARV.
Interest Rates, Points and Closing Costs
A hard money loan typically carries interest rates of 12 to 20 percent depending on borrowers’ credit rating, with repayment periods that range from 6 months to several years. However, a hard money loan typically carries 1 to 2 points. On a 140,000 loan, 2 points equals 2,800 dollars. There may also be closing costs and other fees added to the loan – all of which increase the amount borrowers must ultimately repay.
The LoanNow Alternative
With LoanNow, you’re not required to put up your house or any property as a condition for being approved for a loan. We never require collateral as a condition for obtaining our loans. LoanNow also looks beyond your FICO score to consider your entire financial circumstances – we approve many borrowers turned down for a hard money loan. We also do not add points, closing costs or any hidden fees to our loans.
In fact, borrowers who maintain consistent on-time payments with their LoanNow loans qualify for LOWER interest rates for future loans. Our mission is to provide the money you need now and improve your finances for the future. For many borrowers, LoanNow is a better alternative than a hard money loan. Why not check us out today!