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The popularity of hard money personal loans guaranteed homeowners sufficient funding until the housing crisis changed it all. It was normal for relatively new homeowners to get instant financing since most banks were more than willing to give them a loan. However, today things are different from banks employing strict requirements to applicants. This has led to people with low credit scores locked out from accessing loan products.

Applying does NOT affect

your FICO® credit score!

If you’ve been having trouble with getting a loan from the bank, then a hard money loan may be one of the several options available to you. However, you can also get a better deal through Nation 21.

How do hard money loans work?

Whether you are looking for a home equity line of credits (HELOC) or a home equity loan, you may be required to have perfect credit scores before you are approved. It’s important to realize that both of these loan types are pegged on the equity your home has accumulated over time. On the other hand, a hard money loan is dependent upon the real value of the property as opposed to equity.

For this reason, if you own a house but you have a poor credit score it can be easy to get a loan. on the contrary, it would be almost impossible to get a home refinancing loan when you don’t have a perfect financial profile.

A lender considers the After Repaired Value (ARV) when determining the amount of money you can get. For instance, your home may be currently valued at $150,000, but you need some additional $10,000 for repairs. After you’ve completed all the necessary repairs, the home will be worth at least $170,000.

However, a lender will only give you only 70% of the total value of the home. Therefore, if you have a home with an ARV value of $170,000 the amount you can get is $119,000. At the same time, these loans come with a slightly higher interest rate than you would have to pay for a HELOC.

Why people use hard money loans

To most people, this financing option is quite attractive, especially when getting a loan from other avenues proves to be difficult. The turnaround time also tends to be better than you would have with regular loans from banks. This could be due to the value of collateral presented which makes most lenders confident when issuing the loans. However, some lenders act fast because they are not interested in digging and assessing small aspects of your financial profile. All you are required to do is provide proof that you can service the loan and the money can be in your account within a short time.

Compared to traditional bank loans, a money loan offers a higher level of flexibility. Lenders tend to review every application independently which means it’s easy to get a customized loan deal. If you are dealing with an individual lender or mid-sized company, it’s possible to initiate talks and further discuss the loan. This is a feature that is absent when working with multinational corporations since their rules tend to be rigid.

What is the most appropriate time to use this option?

Sometimes, you could be having the exact amount to pay a down payment for a home only to find out that your bank can’t lend you any money. This is where a money loan comes in to save the day. If you’ve had financial difficulties in the past and damaged your credit scores, getting a mortgage may be close to impossible.

This doesn’t mean that you should let attractive opportunities just fly away. If you have a stable job but you can’t convince your bank to loan you some money for a mortgage, then you can use the cash you have to cover the down payment then take a hard money loan to acquire the property. If you manage to work on your credit scores before you have cleared the loan, it’s possible to take a conventional mortgage and pay off your loan. The logic here is that a traditional mortgage has lower interest rates.

Another group of people who will find a money loan with hard/ poor credit attractive as those in the home-flipping business. Generally, it doesn’t make sense to get into a decade-long mortgage agreement. When you know you’ll hold onto the home for one or two years; then a hard money loan can be quite useful. If you want to get a loan that is geared towards helping you improve your financial well-being, Nation 21 is here for you.

Applying does NOT affect

your FICO® credit score!

Do you have any further questions?