Hard Money Lenders Dallas: Top Choices and Alternative Financing Options

What are hard money loans used for?

Hard money loans address specific financing needs in the Dallas real estate market. They’re often sought after by investors who require fast funding or may have difficulty qualifying for traditional bank loans. Let’s learn more about what hard money loans are typically used for:

Flipping a house: For Dallas investors focused on flipping homes, hard money loans offer fast access to cash for purchasing and renovating properties. These quick-turnaround loans help flippers acquire properties in competitive markets, make necessary improvements, and resell them for profit in a short timeframe.

Buying an investment rental property: Investors seeking rental properties can use hard money loans to snap up properties fast, especially those needing immediate repairs. Compared to traditional bank loans, hard money loans allows landlords to complete renovations and start generating rental income more quickly.

Purchasing commercial real estate: Hard money loans are often used in commercial real estate transactions due to their flexibility and quick closing times. They are particularly useful in situations where timing is crucial, and a quick decision can mean the difference between securing a valuable investment or missing out altogether.

Borrowers who can’t qualify for traditional loans: Individuals with substantial home equity but poor credit or other disqualifying issues sometimes approach hard money lenders in Dallas for assistance. With hard money loans, qualification is determined more by the asset’s worth than the borrower’s credit score.

Homeowners facing foreclosure: Homeowners nearing foreclosure may use hard money loans to refinance their debts or buy time to sell the property. This can provide a temporary solution to avoid losing their home or 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. Typical costs include:

• Interest rates: 8% to 15% or higher, based on risk assessment.
• Origination fees: 1% to 5% of the loan amount.
• Closing costs: Legal, appraisal, and administrative fees.
• Points: A percentage of the loan amount charged upfront.

Online calculators can help 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 assist in purchasing homes with lower down payments and reduced interest rates.

Peer-to-peer loans: These loans are provided by individual investors through lending platforms like Funding Circle, functioning similarly to hard money loans but often with different terms.

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 listing pops up when you’re least expecting it. Maybe it’s a rare mid-century modern home or a two-bedroom condo within walking distance of your job.

If you’re a Dallas homeowner wanting 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 you could see 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%.

3 top hard money lenders in Dallas

Should I partner with a hard money lender in Dallas?

The decision to use a hard money lender in Dallas should be based on your individual situation and real estate investment goals.

Hard money loans are ideal for projects requiring quick turnaround or when traditional financing just isn’t an option. If you’re ready to manage the higher costs and shorter repayment terms in exchange for fast, flexible funding, consider reaching out to a hard money lender in Dallas for your next investment opportunity.

For homeowners looking to tap into their home’s equity, a program like HomeLight’s Buy Before You Sell might be a better fit. Instead of taking on a sky-high interest rate, you’ll pay a small flat fee while benefitting from a more competitive offer and a simplified move.

As with any major financial decision, consider your long-term strategy and consult with a financial advisor to make sure it aligns with your overall investment goals. If you’re looking to connect with investor-friendly real estate agents in Dallas who have access to trusted hard money lenders, let HomeLight introduce you to top professionals in your area who fit that criteria.

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