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Online hard money loan calculators can help estimate these costs and give you a better idea of your total expenses.
Alternatives to working with hard money lenders
If you’re a homeowner looking to leverage your current home’s equity, you might want to consider these alternatives:
Take out a second mortgage: If you have significant equity, a home equity loan or home equity line of credit (HELOC) can provide funds at lower interest rates compared to a hard money loan.
Cash-out refinance: This option allows you to refinance an existing property, pulling out cash to finance your new investment, often with lower interest rates than hard money loans.
Borrow from family or friends: A personal loan from family or friends can offer flexible repayment terms and potentially lower or no interest rates, making it a more affordable option.
Use a government-backed loan program: Programs offered by 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 provided by individual investors through lending platforms like LendingClub or Prosper, functioning similarly to hard money loans but often with different terms.
Explore specialized loan programs: Consider specialized loans for fixer-uppers or investment property refinancing if you already have a hard money loan and seek to replace it.
Request a seller financing option: In some cases, sellers may agree to finance the purchase themselves, which can result in lower closing costs and less stringent eligibility requirements.
How to buy before you sell
Sometimes, the perfect home listing pops up out of nowhere. Maybe it’s a charming bungalow in historic Hyde Park or a loft-style condo in the Market District. If you’re an Austin homeowner who wants to buy a new home before selling your current one, HomeLight offers an innovative solution that simplifies the process.
The Buy Before You Sell (BBYS) program lets you tap into the equity of your current home to make a strong, non-contingent offer on a new property. Once your home qualifies, you can get your equity unlock amount approved within 24 hours with no cost or commitment required. This allows you to purchase your new home first and then sell your current home vacant, eliminating the stress of moving twice.
Here’s how HomeLight Buy Before You Sell works:
While BBYS charges a flat fee based on your current home’s sold price, the savings in other areas can offset this cost. You could save on moving expenses, temporary housing, and potentially get a better deal on your new home. Plus, HomeLight’s BBYS fees are usually much lower than the interest rates on bridge loans, which range from 9.5% to 12%.
