Hard Money Loan Calculator: How Much Will Your Loan Cost?

Cody Cromwell
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How to get a Money Loan in Canada?

If you are looking at a hard money loan to fund your real estate property, then you will need to know how to get a money loan in Canada.

And the first step to securing a hard money loan is to understand the approval process and the considerations that are made when the decision about lending is made.

There are many factors that are considered before you get a money loan in Canada.

But the starting point to getting a money loan in Canada is to understand the approvals and penalties associated with a money loan.

So below, we look at the approved & funded projects that were approved by the Feds & rules & regulations surrounding a money loan in Canada.

We investigate what factors are looked at when deciding to approve a Loan for you and what are the approved uses, lending methods, terms, rules, regulations and controlled money loan projects.

Next, we explain everything involved in the application for a money loan and the required documentation that need to be submitted.

We also take a look at the types of money that you can apply for, including personal, commercial and institutional money loans.

Finally, we answer the essential question about what to do after you have made the application for a money loan.

How the Hard Money Loan Calculator Works

Hard Money Calculator Inputs

Loan Amount: the amount you need to borrow

Interest rate: the rate of interest you will be charged on the loan … this is the interest rate your loan will be fixed for the length of the loan

Term: the length of the loan … 1 month term, 1 year term or other period” the longer the term, the lower the interest over the life of the loan, though the monthly payment will be larger

Down Payment: the amount of money that needs to be paid up front before the loan funds will be provided

Lender Fees: the fees associated with taking out the loan through your lender or broker․ you can decrease or even eliminate the lender fees if you shop around or try to secure your loan through another source

Introductory:: the amount of money you can borrow for the length of the loan on a discounted rate. Typically this will be 100% for the initial loan period

Down Payment: usually this will be around 10% of the loan amount

Lender: the type of entity that will be lending you the money … traditional bank, non-bank party

Term: the length of time the loan money is available for use ․ 1 month, 1 year, etc.

Purchase Price

Your purchase price should be 50% of sale price or the par value of the mortgage.

Down Payment- First Mortgage down payment is 20%.

Interest Rate- Closing costs include loan origination fees and third party title insurance so check that you are able to just get a loan and no title insurance.

Approximate Terms- A conventional loan is for 30 years (15 years of interest + 15 years of amortization).

Intro Rate- The First Mortgage rate is 6% or 4.5% (fixed) + 2.75% (variable).

Loss Ratio– 35% (loan loss ratio) is about right if you are well capitalized.

Projected Equity- Here is your projected equity, after all closing costs have been paid, or when you refinance.

Reviewing this hard money calculator will help you determine if this loan is a good option for you. Remember, every loan is different, and your applications may receive different responses. You might have to work with the lending agent to make sure you obtain the best loan–just like shopping for a car, you never know which car will be the right fit for you.

Repair Costs

Hard Money loans can include the cost of repairs. The major difference between a hard money loan and a traditional loan is that a hard money loan can be used to fund repair costs. Hard money loans are quickly disbursed. They are secured by liens on the property. Generally hard money loans are made in 10% – 25% hard money loan rates. These loans are normally repaid in one payment to the security holder.

Hard money loans are normally applied for real estate and general business repairs.

When to Use Hard Money Loans

Hard Money Loans may be the most suitable choice if a real estate situation would be difficult to repair. A real estate hard money loan is only made possible by a catalyst to relocate or construct a new build. The catalyst would be the existing property being of a higher value.

Hard Money Loans: A Quick and Easy Option

Hard money loans are normally used for any capital purpose. Sometimes they help a family by having quick access to money to tide the family over until an inheritance comes through.

A Hard Money loan can also be used as an acquisition tool. Take for example a person who successfully applies for a bank loan for a house. If the bank is reluctant to make the loan, a hard money loan could be considered.

Estimated After Repair Value (ARV)

Your ARV or the After Repair Value is an estimate of how much a car will cost if you decided to sell it after the car was repaired and inspected.

Note: The ARV for a car is after marketing, inspections, and repairs has been completed.

It is an estimate of what the car will be worth after it is fixed and inspected. You should always check the value these cars by looking up the estimated value of a car on Google, or by asking a professional.

How to Calculate the after Repair Value of a Car

Before you can calculate the After Repair Value (ARV), you have to estimate your car’s value before any repairs – this is the estimated commodity or market value of your car/truck. Once you’ve made the estimate, you can divide by the market rate of your area to find the loan amount with a hard money loan.

1: Calculate your car’s Trade In Value:

Before you do anything else, you’ll want to figure out how much your car will be worth once you’ve completed the repairs and it’s inspected. Once you’ve completed that step, you can find our valuation formula.

Percent the Lender Will Fund

Percent-down payment: The amount your own equity will total, if all of your down payment (5%) is put toward closing costs

Amortization: The amount of your monthly payment (any discount or equity loan) that will be covered by your loan, after your down payment and closing costs have been paid. The sum of this amount will be equal to the principal balance.

Annual interest rate: The annual percentage rate (APR) for your home loan will be set based on the lenders initial appraisal value of the property and their final closing price. You can use our home loan calculator to obtain your best estimated rates. As you fill in your personal information and other key details from your loan, our calculator provides you with the rate you will be charged.

Cash out: You will pay for any additional costs associated with the loan, such as points and origination fee.

Personal income: Enter your monthly total gross income to arrive at an annual total.

For a hard money loan of up to 5,000, the lender may only fund up to 50% of the value of the mortgage. The lender typically does not require any down payment. The lender can only fund the difference between the initial appraisal value and the final home loan value.

Hard money lenders require that the customer (borrower) assumes 100% of the risk in the property.

Choose Funding Type

The hard money loan calculator is an online tool that’ll help you determine the amount of the loan you can receive and the interest rate you’ll pay in addition to comparing hard money funding alternatives.

This calculator will assist you if you’re interested in obtaining a hard money loan, and in which type of funding you may benefit the most.

The main thing the loan calculator gives you is the loan amount and the interest rate based on your creditworthiness.

It’s very simple to use, simply enter your name, social security number or the title number of your vehicle, and your desired loan amount.

The next input is you FICO score, which will automatically calculate your maximum loan amount with some limitations. You can also enter a FICO score if you choose.

The last step is to choose a funding source from the drop-down list.

Term of Loan

60 months

Interest Rate: ,000

{Each= Monthly

Principal: ,000

Amortization: ,000

By calculating your monthly payment, you will know how much you have to pay every month, and the total amount that you owe in the end.

See what your monthly payment will be if you decide to borrow the money for 60 months. Since every loan offer will be different, you will have to decide what interest rate you are willing to pay. The interest rate will be a percentage of the loan amount.

So, by calculating your monthly payment, you will know how much you have to pay every month, and the total amount that you owe in the end. When you know how much you owe, you can decide if you want to borrow the money or not.

Knowing what your monthly payment will be is the first step.

The second step would be to determine the monthly payment based on the interest rate that is offered.

Interest Rate

The interest rate you and your lender will agree on will have a lot to do with your success in securing a hard money loan.

If you’re in the market for a second home or expensive piece of real estate, you have to remember that the higher the interest rate you’re paying, the more expensive the loan will be. Fortunately, you can negotiate the rate down over the course of the loan, which brings the overall cost down for your lender.

Remember that even the smallest things still cause a difference, like with homeownership. Your property taxes are usually due quarterly. If you can’t afford to pay them, you may be able to work out a payment plan.

Things like planning the renovation, even something tiny like updating the cabinets, could be factors that get you a lower interest rate. Your lender will also consider if your credit history and your debt to income ratios look favorable to them. If you’re just starting out in the work force, that means you could negotiate a better interest rate. If you can prove to your lending source that you have been able to get out of debt, get a job and build good credit, your chances go up even more.

Points and Loan Origination Fees

Every lender has a fee for taking your money. Some are small, some are sizable, and some can cost as much as 10% of the loan amount.

Points generally cost 1%-2% of the total loan amount. Points are most often paid when you close on your loan. The exceptions are purchasing a home with a seller carrying an FHA or VA loan (because the seller makes the initial down payment), and purchasing a home with a home-secured loan. In those cases, you’ll pay points up front, as part of your loan.

Hard Money Loan Calculator Outputs

How much will your hard money loan cost? If you’re looking for hard money lending online, then you’re probably wondering how much your loan will cost.

How much should you borrow?

What are the interest rates on hard money lending?

What is the hard money loan down payment?

How much can I borrow?

These are some of the questions that you may have been asking yourself.

To help you get a better handle on the answers, use our hard money loan calculator below. This calculator will help you determine the answers to each of the questions above.

To use this calculator to determine how much you should borrow for a hard money loan, you just input your information and press calculate. It doesn’t get any more convenient than that!

This calculator is intended and primarily designed for hard money investors to figure out hard money loan funding and financing at a more macro level.

Want to leverage your hard money loan investment and more fully understand the lending process? Attending a hard money basics conference, attending one of our hard money courses, & attending one of our hard money seminars is a great way to get an in-depth understanding about how to use the loan itself and how to best leverage the money you borrow to make more money.

Loan Amount

Term (years):

Years (1,2,5,7, 10, 30)

Interest Rate:

% (fixed, variable)

Lenders Rate:

% (fixed, variable)

Points:

buyout price point, preferred cash refunding point, preferred equity refunding point

Borrower Effort:

hours/week/month

Estimated Earnings:

$

LOIRR:

loandollars÷loanpayment

7% APR:

(1+loandollarrate)*(1+loanpaymentrate)/100

Loan Balance at Term End:

$

Down Payment

Calculator: How Much Down Payment Do I Need?

Hard money, or private money, loans are used to finance real estate purchases. The loan requires little to no down payment and requires the borrower to contribute all the funds for the balance.

This type of loan is considered a high risk loan by some lenders when compared to high credit conventional lending.

Things to consider:

Hard money loans are usually short term loans … meaning they roll over less often than revolving loans. If it is a recurring loan the loan term should be less than 6 months.

Hard money loans have one purpose and this is to buy real estate.

Back, property and land is considered to be an asset. This means they will be considered as collateral to secure your loan. If you don’t have the assets to secure your loan you won’t be able to get approved.

You have to have some debt equity available to purchase property.

It is not uncommon for the investor to get their money back before you finish any rehab work.

There is a lot of paperwork involved with creating and closing this loan.

Property is required and the lender will set the purchase price.

Most lenders require some sort of letter of credit, including some form of an appraisal.

Cash At Closing

There are three basic types of closing costs that you’ll encounter when you finance a home purchase or refinance an existing loan. These closing costs are called loan origination fees, title or escrow fees, and inspection fees.

Other expenses paid at the closing may not be listed on your closing statement, but these three costs are usually standard for conventional loans and FHA loans. Loan origination fees are the fees charged by your lender to originate the loan, and these are paid even if you’re making your loan with cash from your savings.

Title or escrow fees are the fees paid to have the title insurance on the property prepared and settled. Title insurance protects the lender from claims against the property and allows the lender to release the mortgage.

Inspection fees vary. Usually a borrower pays an inspection fee when the home is purchased, but these fees can also be incurred if the borrower buys a home that needs to have some repairs completed.

Upfront Fees

So you’re thinking about taking out a hard money loan, and you’ve been offered a fixed or an adjustable rate loan. What should you do to make the best financial decision?

In hard money loans, upfront charges and higher interest rates often take precedence over the term of the loan. And the higher the upfront charges and the higher the interest rate, the higher the amount of the loan.

So, here is a little bit of advice:

Ask the lenders for the monthly payments you’re going to make.

If the payments results are not as what you expected, think twice before closing the deal.

If you like to pay higher interest on the loan, it always a better idea to opt for an adjustable rate loan than a fixed rate loan.

Sometimes there are co-borrowers on the loan who are included on the paperwork, and they also get charged a higher upfront and interest rates.

If the lender will charge you extra for risk analysis, it is always a better idea to get risk management insurance in place.

Ongoing Interest Costs

What do they mean?

While it is easy to get caught up in the math of rates and timeframes involved in a hard money loan, the biggest consideration on the lender’s side is not how much you will need or will pay in interest.

No, the question every lender wants you to ask yourself (or your lender to ask you) is: how much will your loan cost? (there’s a good reason why you get asked if you want to finance an existing loan – because the lender wants to know what you are getting into!)

The simple answer is this: although the true costs of any loan may be hidden and unknown to the borrower at the time the loan closes, the ongoing expenses of a loan are on display a few days after the loan is closed and the first payment is due.

Total Costs of the Hard Money Loan

The hard money loan itself is generally the highest cost of the loan since hard money lenders charge borrowers a flat rate for their services. The total cost of the loan is broken down into three parts:

{1}. How much of a down payment will you need to put down? This includes the down payment, origination costs, points and the hard money fee.
{2}. How much can monthly payments be on the hard money loan?[1]
{3}. An estimate of the closing costs involved.

Part 1: How Much Down Payment Do You Need?

The maximum amount of money you can borrow on a hard money loan is determined by the lender, so you’ll need to find out that maximum amount. But the maximum amount you can actually borrow is limited by the borrower’s FICO score.[2]

Where to Find Calculator Inputs

A hard money loan is a bridge loan that serves as a short-term interim loan between funding through a full hard money loan to purchasing or refinancing.

A short-term interim loan provides an opportunity for a borrower to purchase or refinance an asset that does not provide predictable cash flow. Some lenders expect the borrower to provide a cash flow analysis that may be as simple as weekly or monthly statements from an employer, or a conservative estimate of income for the next 12 months. If there is a potential in finding an investor for the property involved, more advanced cash flow analysis may be provided.

The number of hard money lenders in the U.S. has shrunk significantly since the 2008 debt crisis. The demand for high yield lenders is now extremely high and competition is high for the best deals.

The following calculator will help you determine the money to be borrowed, the customer's monthly payments, and the term of the loan. You will need the following information to use the calculator:

  • ● Property type
  • ● Purchase price
  • ● Age of property
  • ● Down payment
  • ● Loan term
  • ● Loan type
  • ● Annual cash flow
  • ● Loan amount

Hard Money Loan Application Information

A hard money loan application is an alternative to a line of credit, or traditional bank financing. When you run a line of credit through your bank, you don’t have to pay anything up front and instead make small payments each month. Lines of credit are usually used for buying assets like land and equipment, or expensive goods such as vehicles or jewelry.

When you take out a hard money loan, you have to pay a substantial upfront fee. For this reason, it’s usually used to buy long-lasting or hard assets such as real estate, as opposed to buying and selling assets with periodic payments.

When you take out a hard money loan, you can choose to work with a mortgage broker, a direct lender or a private lender. Working with a broker will typically result in a lower upfront fee, but it will increase your chances of getting denied for a loan. Working with a direct lender or a private lender will incur a higher upfront fee, but you can build up a history of successful loans and get approved much faster.

Depending on the type of hard money lender you work with, the loan amount, timeframe, and terms will be significantly different. Here are some of the most common loan options.

Bottom Line

Hard Money Loans

Your hard money loan allows you to unlock the money you need for real estate deals and residential mortgages.

Hard money loans are valuable tools that can help you leverage your assets to secure the funds you need. There isn’t a landlord or agent out there who doesn’t use hard money loans for residential real estate sales. Hard money loans are also essential for residential mortgages. Real estate investors, contractors, manufacturers and businesses all use hard money loans to leverage their assets and secure the funds they need when money is tight or there simply aren’t any other options. Because hard money loans are generally available for terms of shorter duration….

Most hard money lenders prefer short terms, usually of 12 months, and are more willing to lend money for assets that are already owned. Hard money lenders prefer to make money in ways that have a chance of being repaid quickly; it’s paramount that you also have the income to service the loan.

Keep this in mind when you calculate how much to request for a hard money loan.

Your bottom line loan amount will depend on how much you can offer as security for the loan, i.e., your assets, as well as the amount of money you need.