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Use online hard money loan calculators to estimate these costs accurately.
Alternatives to working with hard money lenders
If you’re a homeowner looking to leverage your home’s equity, here are some alternatives to consider:
Take out a second mortgage: If you have significant equity, a home equity loan or a home equity line of credit (HELOC) can provide funds at lower interest rates than hard money loans.
Cash-out refinance your home: This option allows you to refinance your existing mortgage, pulling out cash to finance new investments, often with lower interest rates.
Borrow from family or friends: Personal loans from family or friends can offer flexible repayment terms and potentially lower or no interest rates, making them a more affordable 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: Loans from individual investors through platforms like Funding Circle can function similarly to hard money loans but often come with different terms.
Explore specialized loan programs: If you already have a hard money loan and want to replace it, consider specialized loans for fixer-uppers or investment property refinancing.
Request a seller financing option: Some sellers may agree to finance the purchase themselves, resulting in lower closing costs and less stringent eligibility requirements.
How to buy before you sell
Sometimes, the perfect home appears when you least expect it. Whether it’s a charming Victorian in Irvington or a modern loft in downtown Indianapolis, timing is everything. For Indiana homeowners looking to buy a new home before selling their current one, HomeLight offers an innovative solution that simplifies the process.
The Buy Before You Sell (BBYS) program allows you to use the equity in your existing 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 commitment required. Once approved, you can confidently purchase your new 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 carries a flat fee based on your current home’s sold price, the potential savings in other areas can outweigh the cost. You can save on moving expenses and temporary housing, and potentially secure a better purchase price on your new home. Additionally, HomeLight’s BBYS fees are typically much lower than the interest rates on bridge loans, which currently range from 9.5% to 12%.
