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Most people are not conversant with the real meaning of a hard money loan. Basically, these are real estate loans given out by individuals. Most hard money lenders have strict requirements and they are very cautious before they approve any loan request. However, the loans can have destructive effects on people who default on the agreed payments.

Applying does NOT affect

your FICO® credit score!

The good news is that you can find a better deal easily with Nation 21. With our experience and expertise, we help you to get a loan that will give you the money needed quickly and conveniently.

What are hard money loans?

You will often hear these loans being referred to as private money but the term comes from the nature of the source of funds.  The loan is issued on the basis of the total value of a home or real estate. However, they are different and the value isn’t pegged on equity-like it’s done in HELOC and mortgage refinance loans. Normally, the total amount given will seldom go beyond 70% of the value of the home in question in a fully repaired condition.

For instance, if your home is worth around $175,000 at the moment but you need some additional $10,000 for repairs. After the repairs have been made, the total value of the home can increase to around $200,000. And that’s where you start hearing about After Repaired Value (ARV). When seeking a hard money loan with this home, you can get up to $140,000 which represents 70% of the total value of your home.

Why should you use a hard money lender?

Hard money lenders are a good solution when you can’t get a traditional lender to get you the money needed. The speed with which these funds get processed is very impressive. Perhaps it’s because most lenders put more emphasis on the collateral on the table. Sometimes, lenders are not focused on seizing your property but they just don’t want to go to the trouble of reviewing the tiniest detail your credit history. As long as you can prove your ability to service the loan and you have established a healthy relationship with them, the money can come pretty fast.

Applying does NOT affect

your FICO® credit score!

Another aspect that makes these loans attractive is the flexibility they offer. Unlike traditional loans that tend to be somehow rigid, a hard money loan can be flexible and thus friendly to borrowers. Because most lenders will be analyzing each loan deal independently, it’s likely you will get a customized deal depending on your financial profile. The flexibility also comes from the fact that you can talk things out with your lender especially when they’re individuals or a small company as opposed to a large strict corporation.

When should you use this option

If you have the cash at hand required for a down payment for a house but the banks let you down, this can be a good option. In addition, if you are faced with a foreclosure or any kind of red flag that damages your credit, you can use the cash at hand and a hard money loan to acquire the coveted property before it becomes unavailable.

For instance, if you lost your previous job leading to a foreclosure some years back but you are now in a good job position few banks will be willing to give you money. Assuming you have managed to get a deal for a beautiful home but your credit history still haunts you, it’s wise to use hard money loans to get the home before the offer expires. After your credit score has recovered, then you can use the traditional mortgage loans to pay off the previous loan.

If you are a flipper, it’s not appropriate to sign a decade-long mortgage loan. Instead, hard money lenders offer the best alternative because you’ll only hold onto the property for a year or two before selling it. at first, you may be concerned by the interest rates but you’ll soon realize the convenience outweighs the cost.

Interest rates and closing costs

Depending on your credit rating, these loans bear interest rates that are somewhere around 12% – 20%. Once approved, you will be required to pay the money in 6 months or in a few years. However, this depends on your lender as well as your preferences. Apart from the interests and the principal amount, there can be some additional closing costs and fees applicable to the amount.

The better option

With Nation 21, we don’t impose heavy requirements when getting you a loan. In fact, you are not required to risk your property or the very home you live in to get approved. If you want an option that doesn’t treat you like a FICO score but will consider your overall financial health, then you’ve come to the right place. In addition, if you have tried getting a hard money direct loan from other lenders and you were shown the door, you can check with us today.

Applying does NOT affect

your FICO® credit score!

Do you have any further questions?