Richmond’s Hard Money Lenders: Flexible Financing Solutions

What are hard money loans used for?

Hard money loans are versatile and can be used for various real estate needs. Here are some common uses:

Flipping a house: Ideal for flipping homes, providing quick funds for purchasing and renovating properties to sell at a profit.

Buying an investment rental property: Perfect for rental properties, offering fast financing to secure investment opportunities.

Purchasing commercial real estate: Useful for acquiring commercial real estate, where traditional financing might be slow or unavailable.

Borrowers who can’t qualify for traditional loans: Beneficial for those who can’t meet traditional loan requirements due to credit score or other issues.

Homeowners facing foreclosure: Provides a solution for homeowners needing funds quickly to avoid foreclosure, allowing them to sell or refinance.

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 looking for ways to leverage your current home’s equity, here are a few options to consider:

1. 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.
2. 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.
3. Borrow from family or friends: A personal loan from family or friends can offer flexible repayment terms and potentially lower or no interest rates.
4. 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.
5. 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.
6. 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.
7. 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 purchase their next home without the stress of selling their current one first.

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.

The benefits of this program include avoiding double moves and double mortgages, reducing the pressure of finding a buyer quickly, and enabling you to make a competitive offer on your next home.

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 Richmond

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 available in Richmond.

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 Richmond?

Hard money loans are often best suited for real estate investors who need quick, flexible financing to capitalize on opportunities like flipping homes or purchasing rental properties. However, depending on your circumstances, these could be a good move for you. These loans offer speed and convenience but come with higher costs and shorter terms compared to traditional loans.

For homeowners looking to leverage their equity without the high costs and risks of hard money loans, HomeLight’s Buy Before You Sell program can be an excellent alternative. This program allows you to secure your next home while still living comfortably in your current one. Whether you’re a seasoned investor or a homeowner seeking a smoother transition, evaluating your options in Richmond will help you make the best financial decision.

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