Are you looking to flip a property in sometime in the near future then it might be a huge help for you to get a loan for the house and that is when something called hard money can come into the picture.
Hard money loans are not just for houses but are loans that are given out on properties and collectibles where the loan approval process rather depends on the property but not on the buyer.
Though the buyer first needs to meet the required qualification for a loan but the loan amount to be provided will be dependent on the property, its status of repair and more works to be done that will help you to get a more reasonable amount for the purchase on the go.
In this article, we will be explaining to you how a normal hard money calculator works.
How does the Hard money loan calculator work?
Since you are moving forward to buy a house or a property then you need to look at the loan amount you will receive based on the hard money loan calculator that we have explained below.
- Purchase Price: The price of your property or house purchase is the most important factor on which the whole calculator works, assume this to be 1,00,000 INR Rupees
- Repair: If there are any additional repair costs then assume it to be 15,00 INR Rupees
- After Repair Value: What would the cost increase after the repair is done can be assumed to be 3,00,000 INR Rupees
- Loan Term: Loan terms can be between 1 – 24 months but let us take 24 months as the highest here
- Interest Rate: Common interest rates are between in the range of 7% – 15%, so we take 10% here
Depending on the above value assumptions
- Loan Amount: The hard money loan to be approved is going to be 2,00,000 INR
- Cash to Buyer At Closing (If Any) can be at 1,20,000 INR
- Up Front cost is 15,000 INR
- Interest can be 20,000 INR
- Then the total loan to be processed is going to be 1,55,000 INR.
And this is how the hard money calculator works!
How does a hard money loan work?
It depends on a lot of varying costs that includes the cost or purchase value of the property, repair costs, cost of the house after sale, interest rate and the loan term on these the hard money loan can be calculated which works the same as any other mortgage but it more dependant towards the property resale or upsell value that the buyer or the seller is looking forward to work on.
Is it hard to get a hard money loan?
No, firstly the buyer who has to be qualified to get a mortgage loan and then they can apply for the Hard money loan which depends as the approvals will be made depending on the property value being made as a transaction.