Hard Money Lenders Long Island: Alternative Financing Options

What are hard money loans used for?

Hard money loans fulfill specific financing needs in the Long Island real estate market. They’re a go-to option for investors who need quick funding or can’t secure traditional loans. Here’s a look at common scenarios where hard money loans come into play:

• Flipping a house: For Long Island investors focused on flipping homes, hard money loans provide fast cash to buy and renovate properties. This allows them to acquire homes quickly, make necessary renovations, and sell for a profit within a short period.
• Buying an investment rental property: Hard money loans are ideal for investors aiming to buy rental properties. They offer the speed needed to purchase properties, particularly those requiring immediate repairs, helping landlords generate rental income faster.
• Purchasing commercial real estate: Investors purchasing commercial properties benefit from hard money loans’ flexibility and quick closing times. These loans are particularly valuable when timing is essential, allowing investors to secure properties without the delays of traditional lending.
• Borrowers who can’t qualify for traditional loans: Individuals with substantial home equity but poor credit may turn to hard money lenders. These lenders focus more on the property’s value than the borrower’s credit score, providing a viable option for those who can’t secure traditional financing.
• Homeowners facing foreclosure: Homeowners nearing foreclosure may use hard money loans to refinance or buy time to sell the property. This can offer a temporary solution to avoid losing their home and prevent 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 seeking alternatives to hard money loans, consider these options to leverage your equity:

• Take out a second mortgage: Using a home equity loan or a home equity line of credit (HELOC) lets you tap into your home’s equity at potentially lower interest rates than hard money loans.
• Cash-out refinance: A cash-out refinance allows you to refinance an existing property, pulling out cash to finance a new investment. This often results in lower interest rates than those found with hard money loans.
• Borrow from family or friends: A personal loan from family or friends might offer flexible repayment terms and potentially lower or no interest rates, making it a more affordable option.
• Use a government-backed loan program: Programs like the FHA, VA, or USDA can assist in purchasing homes with lower down payments and reduced interest rates, often making them more accessible than private loans.
• Peer-to-peer loan: Platforms like MeridianLink or Funding Circle offer loans provided by individual investors. These function similarly to hard money loans but may come with different terms and possibly lower interest rates.
• Specialized loan programs: Consider loans tailored for fixer-uppers or investment property refinancing, especially if you’re transitioning from a hard money loan to a more conventional financing option.
• Request a seller financing option: In some cases, sellers may be willing to finance the purchase themselves. This can lead to lower closing costs and less strict eligibility requirements compared to traditional lending.

How to buy before you sell

If you’re a Long Island homeowner wanting to buy a new home before selling your current one, HomeLight offers a solution to make the process seamless. The Buy Before You Sell (BBYS) program lets you tap into your home’s equity to make a stronger, non-contingent offer on a new property.

Here’s how it works: If your home qualifies, you can get an equity unlock amount approved in 24 hours or less, with no upfront cost or commitment. This allows you to purchase your next home with confidence, and then sell your current one while it’s vacant, avoiding the inconvenience of double moves.

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 Long Island

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 Long Island.

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 Long Island?

Deciding if a hard money loan is the right choice for you depends on your individual needs and investment strategy.

Hard money loans are best suited for real estate investors who need quick funding, especially when traditional financing isn’t a viable option. If you’re ready to take on the higher costs and shorter terms in exchange for speed and flexibility, a hard money loan in Long Island might be a great fit.

For homeowners aiming to leverage their equity without the high interest rates, HomeLight‘s Buy Before You Sell program could be a better alternative. This option offers a flat fee, simplifying the process and making your move more competitive.

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