Hard Money Lenders Tampa: Flexible Financing Solutions

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Are you planning your next real estate project in Tampa and considering a hard money loan? Whether you’re looking to flip a two-bedroom bungalow in Seminole Heights or purchase a prime rental property in Hyde Park, hard money lenders in Tampa offer the flexibility and fast funding you need. These loans provide a valuable alternative to traditional financing, especially for those with tight project timelines, limited upfront capital, or credit challenges.

For homeowners looking to buy before selling their current home, we’ll also explore some options to help leverage your home’s equity. This article outlines the key aspects of hard money lending in Tampa, helping you decide if it aligns with your real estate investment or home-buying goals.

Start Making Offers Without Waiting to Sell Your Home

Through our Buy Before You Sell program, HomeLight can help you unlock a portion of your equity upfront to put toward your next home. You can then make a strong offer on your next home with no home sale contingency.

Editor’s note: This post is for educational purposes and is not intended to be construed as financial advice. HomeLight always encourages you to consult your own advisor.

What is a hard money lender?

A hard money lender is a private company or individual that provides short-term, real estate-secured loans. Unlike traditional lenders that focus on credit scores and income, hard money lenders prioritize the value of the property being used as collateral.

These lenders cater primarily to house flippers and buyers of rental properties who need rapid funding and flexible terms. Hard money lenders use after-repair value (ARV) — the estimated value of a property after renovations — to determine loan amounts. Typically, they offer a percentage of the ARV to ensure both profitability and security for their investment.

Interest rates for hard money loans range from 8% to 15% or more, with additional fees such as origination fees, closing costs, and points. If a borrower fails to repay, the lender can seize the property to recover their investment.

How does a hard money loan work?

If you’re a real estate investor in Tampa seeking quick and flexible financing, a hard money loan might be just what you need. Here’s a brief overview of how they work:

  • Short-term loan: These loans typically have a repayment period of 6 to 24 months, unlike the 15- or 30-year terms of conventional mortgages.
  • Faster funding option: Hard money loans can be approved within days, whereas traditional mortgage approvals can take 30 to 50 days.
  • Less focus on creditworthiness: Approval is less dependent on your credit score and income history, focusing more on the property’s value.
  • More focus on property value: These loans are secured by collateral, such as a home, and are based on the loan-to-value ratio of the property.
  • Not traditional lenders: Hard money loans are typically provided by private individuals or companies, not traditional banks.
  • Loan denial option: They are often used by those with poor credit who have been denied a mortgage but have substantial home equity.
  • Higher interest rates: Due to the higher risk, these loans come with interest rates ranging from 8% to 15% or more.
  • Might require larger down payments: Borrowers might need to come up with a larger down payment, sometimes up to 20%–30%, depending on the property’s value and loan specifics.
  • More flexibility: With fewer regulations, hard money lenders can set flexible criteria for debt-to-income ratios and other factors.
  • Potential for interest-only payments: Unlike traditional mortgages, hard money loans might allow for interest-only or deferred payments initially, providing more flexibility in repayment.

What are hard money loans used for?

Hard money loans serve specific needs in Tampa’s dynamic real estate market. They’re often favored by investors needing quick capital or those who face challenges with traditional financing. Here’s a closer look at common uses for hard money loans:

Flipping a house: For Tampa house flippers, hard money loans provide fast access to cash for purchasing and renovating properties. These loans allow flippers to quickly acquire properties, make necessary improvements, and resell them for profit in a short amount of time.

Buying an investment rental property: Investors shopping for rental properties can use hard money loans to secure them quickly, especially those in need of repairs. With these loans, landlords can complete renovations and begin generating rental income sooner than with traditional financing methods.

Purchasing commercial real estate: Hard money loans are great for commercial real estate deals because they offer flexibility and quick closing times. They’re especially helpful when timing is crucial, enabling investors to secure important properties without the usual delays of traditional loans.

Borrowers who can’t qualify for traditional loans: Individuals with significant home equity but poor credit or other disqualifications sometimes turn to hard money lenders. The loans are based more on the property’s value than the borrower’s credit score, providing a viable financing option for those otherwise unable to secure a loan.

Homeowners facing foreclosure: Homeowners facing foreclosure can turn to hard money loans to refinance their debts or gain extra time to sell their property. This can provide a temporary solution to avoid foreclosure and protect their credit score from damage.

How much do hard money loans cost?

Hard money loans typically cost more than traditional loans due to the increased risk and the convenience of fast, less restrictive funding. Here are some common costs:

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

You can use online calculators to estimate your hard money loan costs.

Alternatives to working with hard money lenders

If you’re a homeowner seeking ways to leverage your current home’s equity, consider these practical alternatives:

Take out a second mortgage: Using a home equity loan or a HELOC, homeowners can access funds based on the equity built up in their property, typically at lower interest rates than hard money loans.

Cash-out refinance: This method allows you to refinance your mortgage and withdraw some of your home’s equity in cash, often at more favorable terms compared to hard money loans.

Borrow from family or friends: Securing a loan from family or friends can offer more lenient terms and potentially lower or no interest, making it a cost-effective alternative.

Use a government-backed loan program: Options like FHA, VA, or USDA loans can provide low-interest financing with reduced down payment requirements.

Peer-to-peer loans: Utilizing online platforms, you can get a loan directly from individual investors, often with more flexible terms than traditional lending institutions.

Specialized loan programs: Look for loans specifically designed for property renovations or investment refinancing, which can replace an existing hard money loan with better terms.

Request a seller financing option: Occasionally, sellers are willing to finance the sale themselves, allowing for reduced closing costs and less strict qualification criteria.

How to buy before you sell

Sometimes, the perfect home comes on the market when you’re not quite ready to sell your current one. Perhaps it’s a restored 1920s bungalow in Ybor City or a downtown condo with luxe amenities. For Tampa homeowners looking to buy a new home before selling their current one, HomeLight offers a streamlined solution with its Buy Before You Sell (BBYS) program.

The Buy Before You Sell program lets you tap into the equity of your existing home to make a stronger, non-contingent offer on your new home. If your property qualifies, you can get approval for your equity unlock amount within 24 hours, with no cost or obligation. This approval allows you to purchase your next home confidently and sell your current one vacant, eliminating the stress of moving twice.

Here’s how HomeLight Buy Before You Sell works:

The program charges a flat fee of 2.4% of your current home’s sale price, but the potential savings in other areas can offset this cost. You might save on moving expenses, temporary housing, and even the final purchase price of your new home. Additionally, HomeLight’s BBYS fees are generally lower than bridge loan interest rates, which range from 9.5% to 12%.

3 top hard money lenders in Tampa

Traditional lenders aren’t always the best fit for every real estate investment. If you need to move quickly to grab an opportunity, consider partnering with one of these top-rated hard money lenders in Tampa.

Birchwood Loans

Birchwood Loans Direct, based in Tampa, is a seasoned hard money lender with over 30 years of experience in the industry. This direct lender specializes in providing hard money loans to real estate investors. They can finance up to 60% LTV for a period of up to five years and provide interest-only payments. They’ll consider lending on non-owner-occupied single-family homes and commercial properties. Loans can be approved in 24 hours and close in as little as three to five business days.

Lending clientele: Residential and commercial real estate investors

Loan criteria: Up to 60% LTV

AHL Hard Money

Located in Tampa, AHL Hard Money provides specialized real estate financing solutions. They serve mostly primary residence borrowers, offering hard money for jumbo loans, debt consolidation, taxes, home improvement, and more. While they lend statewide, their primary markets include Hillsborough, Pasco, Pinellas, Polk, Manatee, Citrus, and Hernando counties. AHL Hard Money can close loans in five to 12 days and offers competitive rates and terms.

Lending clientele: Homeowners and real estate investors

Loan criteria: Up to 80% LTV

Hard Money Lenders IO

Hard Money Lenders IO is a Florida-based private lending firm that specializes in providing loans to real estate investors and entrepreneurs. They offer quick funding and flexible terms for purchasing, renovating, or building residential properties. Their loan programs include fix-and-flip loans, rental property loans, new construction loans, commercial loans, and bridge loans. Loan terms vary from three months to six years, with interest rates typically ranging from 10% to 15%.

Lending clientele: Real estate investors and entrepreneurs

Loan criteria: Up to 75% ARV for most loan programs

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.

Should I partner with a hard money lender in Tampa?

Deciding whether a hard money loan is right for you in Tampa depends on your specific circumstances and real estate investment goals. Hard money loans are best suited for real estate investors who need quick funding for projects with tight timelines or those who can’t secure traditional financing. If you’re prepared to handle higher costs and shorter repayment terms for the benefit of fast and flexible funding, a hard money lender in Tampa could be a valuable partner for your next investment.

For homeowners looking to leverage their home’s equity without the high interest rates of hard money loans, HomeLight’s Buy Before You Sell program offers an excellent alternative. This program allows you to pay a small flat fee instead of steep interest rates, helping you make a competitive offer on a new home and simplifying your move.

As with any significant financial decision, it’s important to consider your long-term strategy and consult with a financial advisor to ensure it aligns with your overall investment goals. If you’d like to connect with experienced real estate agents in Tampa who have access to reputable hard money lenders, HomeLight can introduce you to top professionals in the area.

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