Hard Money Lenders Arkansas: Pros and Cons

What are hard money loans used for?

Hard money loans serve specific financing needs in the Arkansas real estate market, often sought by investors requiring fast funding or those unable to qualify for traditional bank loans. Here’s how these loans are typically used:

Flipping a house
For Arkansas investors focused on flipping homes, hard money loans offer quick access to cash for purchasing and renovating properties. These loans help flippers acquire properties in competitive markets, complete necessary improvements, and resell them for profit quickly.

Buying an investment rental property
Investors seeking rental properties can use hard money loans to purchase properties, especially those needing immediate repairs quickly. Compared to traditional bank loans, hard money loans allow landlords to complete renovations and generate rental income more swiftly.

Purchasing commercial real estate
Hard money loans are often utilized in commercial real estate transactions due to their flexibility and quick closing times. They are particularly beneficial when timing is crucial, helping investors secure valuable investments without delay.

Borrowers who can’t qualify for traditional loans
Individuals with substantial home equity but poor credit or other disqualifying issues often turn to hard money lenders in Arkansas. These loans focus on the asset’s value rather than the borrower’s credit score, providing an alternative financing option.

Homeowners facing foreclosure
Homeowners nearing foreclosure may use hard money loans to refinance their debts or gain time to sell the property. This can provide a temporary solution to avoid losing their home and prevent a foreclosure mark on their credit report.

How much do hard money loans cost?

Hard money loans generally cost more than traditional loans due to the higher risk for lenders and the convenience of quick, flexible funding. These costs can include:

Online calculators can also help you estimate these costs.

Alternatives to working with hard money lenders

If you’re a homeowner, rather than an investor, who is looking for a way to leverage your current home’s equity, here are a few options to consider:

Take out a second mortgage: If you have substantial equity in your home, a home equity loan or home equity line of credit (HELOC) can provide the needed funds at a lower interest rate 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. It often comes 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.

Peer-to-peer loan: These loans are provided by individual investors through lending platforms like Funding Circle. They function similarly to hard money loans but often have different terms.

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: In some cases, 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 listing pops up without warning. Maybe it’s a rare mid-century modern home or a two-bedroom condo within walking distance of your job.

If you’re an Arkansas homeowner who wants to buy a new home before selling your current one, HomeLight offers an innovative solution that streamlines the process.

The Buy Before You Sell (BBYS) program allows you to leverage the equity in your existing home to make a stronger, 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 next home and then sell your current one vacant, avoiding the hassle of moving twice.

Here’s how HomeLight Buy Before You Sell works:

Although there’s a flat fee of 2.4% of your current home’s sold price, the potential savings in other areas might outweigh the cost. For example, you might save on moving expenses, temporary housing, and even the final purchase price of your new home.

On top of that, HomeLight’s BBYS fees are typically much lower than the interest rates on bridge loans, which currently range from 9.5% to 12%.

Traditional lenders might not be the solution for every real estate investment. If you want to move quickly and capitalize on an opportunity, explore the hard money lending options available in Arkansas.

Should I partner with a hard money lender in Arkansas?

Whether a hard money loan is right for you in Arkansas depends on your real estate investment goals. Hard money loans are best suited for real estate investors who need quick funding or can’t qualify for traditional financing. These loans offer fast, flexible funding but have higher costs and shorter repayment terms.

For homeowners wanting to leverage their equity, HomeLight’s Buy Before You Sell program offers a practical alternative. Instead of facing high interest rates, this program lets you pay a small flat fee, providing a competitive offer and simplifying your move.

As with any major financial decision, consider your long-term strategy and consult a financial advisor to ensure it aligns with your overall investment goals. If you’re seeking investor-friendly real estate agents in Arkansas who have access to trusted hard money lenders, HomeLight can connect you with top professionals in your area.

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