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You can use online hard money loan calculators to estimate your total costs.
Alternatives to working with hard money lenders
If you’re not an investor, but rather a homeowner looking to leverage your home’s equity, here are a few alternatives to consider:
Take out a second mortgage: If you have substantial equity, a home equity loan or home equity line of credit (HELOC) can provide funds at a lower interest rate compared to a hard money loan.
Cash-out refinance: This option allows you to refinance your existing property and pull out cash to finance new investments, 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 like the FHA, VA, or USDA can help with purchasing homes through lower down payments and reduced interest rates.
Consider a peer-to-peer loan: These loans are provided by individual investors through lending platforms, functioning similarly to hard money loans but often with different terms.
Explore specialized loan programs: Consider specialized loans for fixer-uppers or refinancing investment properties if you want to replace an existing hard money loan.
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 listing just pops up out of nowhere. Maybe it’s a penthouse unit with a rooftop deck or a 1930s Chicago bungalow. If you’re a local homeowner wanting to buy a new home before selling your current one, HomeLight has an innovative solution to simplify the process.
The Buy Before You Sell (BBYS) program lets you 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 within 24 hours, with no upfront cost or commitment. Once approved, you can purchase your new home and sell your existing one vacant, eliminating the stress of moving twice.
Here’s how HomeLight Buy Before You Sell works:
While the program charges a flat fee based on your current home’s sale price, the potential savings in other areas can outweigh this cost. You might save on moving expenses, temporary housing, and even secure a better price on your new home. Additionally, HomeLight’s BBYS fees are generally much lower than bridge loan interest rates, which currently range from 9.5% to 12%.
3 top hard money lenders in Chicago
Finding the right hard money lender can make or break your real estate deal in Chicago. You want someone who can move quickly and actually understands the local market. Below are three lenders that consistently stand out.
