Hard Money Lenders Memphis: Quick Funding Tips

What are hard money loans used for?

Hard money loans serve various purposes in the real estate market:

• Flipping a house: Ideal for house flippers who need quick funding to buy, renovate, and sell properties.
• Buying an investment rental property: Investors can use these loans to purchase and renovate rental properties.
• Purchasing commercial real estate: Suitable for acquiring and upgrading commercial properties.
• Borrowers who can’t qualify for traditional loans: A viable option for those with poor credit or unconventional income sources.
• Homeowners facing foreclosure: Provides a lifeline for homeowners needing quick funds to prevent foreclosure.

How much do hard money loans cost?

The cost of hard money loans is typically higher than traditional loans due to the increased risk lenders undertake. Here are some typical costs associated with hard money loans:

• Interest rates: These can range from 8% to 15%, depending on the lender’s risk assessment.
• Origination fees: Lenders may charge an origination fee of 1% to 5% of the total loan amount.
• Closing costs: Additional fees at closing can include legal fees, appraisal fees, and other administrative costs.
• Points: Lenders might charge points (a percentage of the loan amount) upfront, which can add to the initial cost of obtaining a loan.

There are also many hard money loan calculators available on the Internet to give you an idea of your costs.

Alternatives to working with hard money lenders

If you’re a homeowner looking 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 loan: These loans are provided by individual investors through lending platforms, functioning similarly to hard money loans but often with 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

HomeLight’s Buy Before You Sell program is designed to help homeowners buy a new home before selling their current one. This innovative program provides a solution for those who need to move quickly and avoid the hassle of carrying two mortgages or making contingent offers.

By leveraging your existing home’s equity, HomeLight makes a guaranteed offer on your behalf, allowing you to purchase your new home without the stress of timing the sale of your current one. The program covers up to 90% of the purchase price, with bridge loan rates typically ranging from 9.5% to 12%. This approach ensures a smoother transition, reducing financial pressure and allowing you to move when it’s most convenient.

Here’s how HomeLight Buy Before You Sell works:

3 top hard money lenders in Memphis

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

Investing in real estate?

Hire an investor-friendly real estate agent who can help you get access to off-market properties at a discount and assess potential rental income based on market trends. HomeLight can connect you with investment property specialists at no cost.

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Should I partner with a hard money lender in Memphis?

Deciding whether a hard money loan is right for you depends on your financial goals and the specific circumstances of your real estate venture. These loans are best suited for real estate investors who need quick access to capital for projects like flipping houses or acquiring rental properties. The flexibility and speed of hard money loans make them viable for those who can handle higher interest rates and shorter repayment periods.

However, for homeowners looking to leverage their equity without the higher costs associated with hard money loans, HomeLight’s Buy Before You Sell program offers a compelling alternative. This program simplifies buying a new home before selling your current one, providing peace of mind and financial flexibility in the Memphis market.

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