Financing a new home purchase is a common subject among potential homebuyers and lenders. However, if you want to flip a home by enhancing an existing property and selling it for a profit, you may also require funding. Luckily, there are financing options for flipping homes if you know where to look. Here are some basic tips for funding a flip:
Hard Money Loans
A hard money loan is a common financing option for house flippers. These loans involve less underwriting and easier qualifications. Hard money loans can have much higher interest rates and startup fees than traditional mortgages.
Private Loans
Private loans are a good option for house flipping. However, they usually require you to have a preexisting business relationship with a bank to get one. If you’ve been with the same bank your whole life, they might be a good place to start since they’ll consider you a lower risk.
Personal Loans
Personal loans can be quick and painless, with no collateral involved. It’s easy to qualify for this type of loan and you can get your money faster than other loan options. However, these tend to have incredibly high interest rates compared to mortgages.
Home Equity Loan
A home equity loan is basically another mortgage with a separate monthly payment. This allows you to augment your current borrowing without changing the terms of your existing mortgage. A home equity loan uses the equity you’ve built in the home to invest in the flipping process.
Home Equity Line of Credit
A home equity line of credit works similarly to a credit card. This type of funding uses your house as collateral and gives you a credit line. These come with their own terms and special conditions but can be an excellent source of funding for flips that you expect to take many years at a time, as you’re often able to defer payments for an introductory period.
These are just some of the most common types of loans used to fund a flip. If you’re considering flipping a property, these financing options are a good place to begin.
About the Author
Andree Riley
I am your Real Estate professional with a demonstrated history of excellence in working in the real estate industry.
Considering a second home or investment property in the Florida Keys? I am a homeowner in Islamorada Florida and specialize in homes and investment properties in the "American Caribbean" from Key Largo to Key West.
Prior to real estate, my professional experience includes 10 years of wine sales and wholesale distribution
A resident of the Detroit Metropolitan Area, and also serve "All Sports Lake" areas of South Haven, Portage and Lake Michigan communities.
I received my B.A. Degree (Bachelor of Arts) in Psychology from Pepperdine
University. A member of (GMAR) Greater Metropolitan Association
of Realtors, and the (FKBR) Florida Keys Board of Realtors.
My hobbies include long time membership in USTA as a competitive
tennis player and team Captain. As well as, organizing tennis matches for fun and
fitness in my community. Call me Directly at 313 506-7476.
