Hard Money Lenders Tennessee: Quick Funding Guide

What are hard money loans used for?

Hard money loans serve specific needs in the Tennessee real estate market. They’re ideal for investors needing quick funding or those who may not qualify for traditional loans. Here’s how these loans are typically used:

Flipping a house: For Tennessee investors, hard money loans provide fast cash to purchase and renovate flipping homes, enabling quick resales in competitive markets.

Buying an investment rental property: Investors can quickly acquire and renovate rental properties with hard money loans, allowing them to start generating income sooner.

Purchasing commercial real estate: These loans offer flexibility and quick closing times, crucial for seizing valuable commercial real estate opportunities.

Borrowers who can’t qualify for traditional loans: Those with significant home equity but poor credit can secure financing based on the asset’s value rather than their credit score.

Homeowners facing foreclosure: Hard money loans help homeowners near foreclosure refinance or gain time to sell, potentially avoiding foreclosure.

How much do hard money loans cost?

The cost of hard money loans is generally higher than traditional loans due to the increased risk and convenience of quick funding. Here are some typical costs:

• Interest rates: These can range from 8% to 15%.
• Origination fees: Lenders may charge 1% to 5% of the total loan amount.
• Closing costs: Additional fees at closing include legal, appraisal, and administrative costs.
• Points: Lenders might charge points upfront, which are a percentage of the loan amount.

Online calculators can also help you estimate these costs.

Alternatives to working with hard money lenders

If you need to tap into your home’s equity, here are some alternatives to traditional financing worth considering:

1. Take out a second mortgage: Utilize your home’s equity with a home equity loan or HELOC, typically offering lower interest rates than hard money loans.
2. Cash-out refinance: By refinancing your mortgage, you can pull out cash based on your property’s current value, often at more favorable rates than hard money loans.
3. Borrow from family or friends: Loans from relatives or friends can come with flexible terms and low or no interest, providing a more affordable option.
4. Use a government-backed loan program: Government programs like the FHA, VA, or USDA loans can help you buy a home with lower down payments and interest rates.
5. Peer-to-peer loan: Platforms like Peerform or Funding Circle allow you to borrow from individual investors, offering an alternative to hard money loans.
6. Specialized loan programs: There are specific loan programs for needs like fixer-upper homes or refinancing investment properties that may offer better terms than hard money loans.
7. Request a seller financing option: In some cases, sellers may finance the purchase themselves, which can reduce closing costs and make qualification easier.

How to buy before you sell

Finding the perfect home can happen without warning. Whether it’s a cozy cottage in the suburbs or a sleek urban condo, if you’re a Tennessee homeowner looking to buy a new home before selling your current one, HomeLight’s innovative solution can make that transition much easier.

The Buy Before You Sell (BBYS) program lets you leverage your existing home’s equity to make a strong, non-contingent offer on a new property. If your home qualifies, you can get your equity unlock amount approved within 24 hours, with no upfront cost or commitment required. This enables you to purchase your new home with confidence and sell your old one vacant, avoiding the inconvenience of moving twice.

Here’s how HomeLight Buy Before You Sell works:

There is a flat fee of 2.4% of your current home’s sold price, but the potential savings in other areas can make it worthwhile. For example, you might save on moving costs, temporary housing, and even negotiate a better price on your new home. Plus, HomeLight’s BBYS fees are generally much lower than bridge loan interest rates, which currently range from 9.5% to 12%.

3 top hard money lenders in Tennessee

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 Tennessee?

Deciding if a hard money loan is right for you in Tennessee depends on your specific situation and real estate investment goals. These loans are best suited for real estate investors who need quick funding for projects with tight timelines or who may not qualify for traditional financing.

If you’re prepared to handle the higher costs and shorter repayment terms for the benefit of fast, flexible funding, a hard money loan could be a great fit for your next investment in Tennessee.

For homeowners aiming to leverage their home’s equity without the high interest rates of hard money loans, HomeLight’s Buy Before You Sell program offers a practical alternative. This program allows you to unlock your home’s equity with a small flat fee, helping you make a competitive offer on a new home and streamline your move.

As with any significant financial decision, it’s important to consider your long-term needs and consult with a financial advisor to ensure it aligns with your overall investment plans. If you’re looking to connect with investor-friendly real estate agents in Tennessee who have access to trusted hard money lenders, HomeLight can introduce you to top professionals in your area who meet that criteria.

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