Online hard money loan calculators can help you estimate these costs accurately.
Alternatives to working with hard money lenders
If you’re not a seasoned real estate investor, but rather a homeowner looking to tap into your home’s equity, here are a few alternatives you might want to consider:
Take out a second mortgage: If you have a lot of equity, a home equity loan or home equity line of credit (HELOC) can provide funds at lower interest rates compared to hard money loans.
Cash-out refinance your home: This option allows you to refinance your existing mortgage, withdrawing cash for new investments, often with lower interest rates than hard money loans.
Borrow from family or friends: Securing a personal loan from family or friends can offer flexible repayment terms and potentially lower or no interest rates, making it a lower-cost option.
Use a government-backed loan program: Programs from the FHA, VA, or USDA can help buyers purchase homes with lower down payments and reduced interest rates.
Consider peer-to-peer loans: These loans are offered by individual investors through lending platforms. They function similarly to hard money loans but often have different terms.
Explore specialized loan programs: If you need to replace a hard money loan, look into specialized loans for fixer-uppers or refinancing investment properties.
Request a seller financing option: On occasion, sellers may agree to finance the purchase themselves, which can yield lower closing costs and looser eligibility requirements.
How to buy before you sell
Sometimes, the perfect home hits the market when you least expect it, whether it’s a single-level home with a pool or a three-bedroom new-construction condo. If you’re an Arizona homeowner who wants to buy a new home before selling your current one, HomeLight offers a convenient solution.
The Buy Before You Sell (BBYS) program allows you to use the equity in your current home to make a strong, non-contingent offer on a new property. If your home qualifies, you can get your equity unlock amount approved in 24 hours or less, with no cost or obligation. Once approved, you can purchase your next home and then sell your current one vacant, avoiding the hassle of moving twice.
Here’s how HomeLight Buy Before You Sell works:
While the program has a flat fee based on your current home’s sold price, you can save a lot in other areas, such as moving expenses and temporary housing, and possibly secure a better purchase price for your new home. Additionally, HomeLight’s BBYS fees are generally much lower than the interest rates on bridge loans, which typically range from 9.5% to 12%.
