Online calculators can help estimate these costs.
Alternatives to working with hard money lenders
If you’re a homeowner looking to tap into your home’s equity for financing, here are some alternatives to consider:
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 a lower interest rate than hard money loans.
Cash-out refinance: This option lets you refinance your existing property and withdraw cash for new investments, typically offering lower interest rates compared to hard money loans.
Borrow from family or friends: Personal loans from family or friends can yield flexible repayment terms and potentially lower or no interest rates, making this a cost-effective alternative.
Use a government-backed loan program: Programs such as FHA, VA, or USDA loans assist in home purchases with lower down payments and reduced interest rates.
Peer-to-peer loan: These loans are provided by individual investors through online platforms and can be a viable alternative to hard money loans with different terms.
Specialized loan programs: Look into loans specifically designed for fixer-uppers or for refinancing investment properties if you want to replace an existing hard money loan.
Request a seller financing option: In some cases, sellers may finance the purchase themselves, resulting in lower closing costs and more lenient eligibility requirements.
How to buy before you sell
Sometimes, the perfect listing appears when you least expect it, whether it’s a one-family, detached home in Flushing or a brick-clad loft in Harlem. If you’re a New York City homeowner looking to buy a new home before selling your current one, HomeLight offers a seamless solution with their Buy Before You Sell (BBYS) program.
The Buy Before You Sell program enables you to leverage the equity in your current home to make a strong, non-contingent offer on your next property. If your home qualifies, you can get your equity unlock amount approved in as little as 24 hours, with no cost or obligation. Once approved, you can purchase your new home confidently, then sell your current home vacant — avoiding the hassle and expense of moving twice.
Here’s how HomeLight Buy Before You Sell works:
The program charges a flat fee of 2.4% of your current home’s sale price, but the potential savings in other areas can offset this cost. You might save on moving costs, 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 range from 9.5% to 12%.
