When you consider the term private lender, you may think about loans from family and friends. But in commercial terms, a private lender is anything but friendly. In fact, a loan gone wrong with a private lender can be financially devastating to borrowers. For many borrowers, LoanNow takes a different approach. Our mission is to provide you with the money you need with repayment terms you can live with.
You may not be familiar with the term “hard money loans.” Hard money loans are real estate loans provided by a private individual – also known as a private lender. Hard money loans are based on the After Repaired Value – ARV – of a home or property. This is in contrast to a mortgage refinance or a home equity line of credit (HELOC), both of which are based strictly on the equity of your home.
You can calculate the ARV of your property and how much you might conceivably borrow from a private lender. Let’s say your home is worth 150,000 dollars, but needs 20,000 dollars worth of repairs. Once you have made those repairs, the value of your home increases to 200,000 – that’s the ARV. A private lender will typically provide a hard money loan of up to 140,000 dollars – 70 percent of the ARV of your home.
A Private Lender Is Not Your Friend
Clearly, a private lender is not your friend. A private lender typically imposes stringent requirements on borrowers that friends or family members would almost never consider. For instance, hard money loans typically carry 1 or 2 points along with interest rates that vary from about 12 to 20 percent, depending on the borrower’s credit status. On a loan of 140,000 dollars, 2 points equals an additional 2,800 dollars. Hard money loans also typically carry closing costs and other fees. And of course, borrowers who default on a hard money loan stand to lose their property.
The LoanNow Difference
Unlike a private lender, LoanNow never adds points or other hidden fees to our loans. LoanNow also does not require collateral – so there’s no need to put your home or other property on the line. By contrast, borrowers who maintain consistent on-time payments of their loans are granted lower interest rates on future LoanNow loans. At LoanNow, our mission is to provide the money you need with repayment terms you can live with. Isn’t it time you experienced the LoanNow difference?