Hard Money Lenders Minnesota: Fast Approvals

What are hard money loans used for?

Hard money loans address specific financing needs in the Minnesota 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 Minnesota 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 quickly.

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 allow landlords to complete renovations and start generating rental income more quickly.

Purchasing commercial real estate: Due to their flexibility and quick closing times, hard money loans are often used in commercial real estate transactions. They are particularly useful when 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 Minnesota 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:

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 help buyers purchase 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. 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: Sometimes, sellers may agree to finance the purchase, resulting 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 Minnesota 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 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’re looking to move quickly and capitalize on an opportunity, explore Minnesota’s hard money lending options.

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 Minnesota?

Choosing a hard money loan in Minnesota depends on your real estate investment needs. These loans are perfect for investors seeking quick capital or those who find it challenging to get traditional financing. While they provide fast, flexible funding, the costs are higher, and the repayment terms are shorter.

For homeowners wanting to tap into their home’s equity, consider HomeLight’s Buy Before You Sell program. This option offers a low flat fee instead of high interest rates, making your move easier and your offer more competitive.

Evaluate your long-term goals and discuss your options with a financial advisor to ensure your choice supports your overall investment strategy. If you need to find real estate agents in Minnesota who are experienced with hard money lenders, HomeLight can connect you with top local professionals.

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