Flipping homes is an activity that intrigues many people. It looks fun and rewarding, and it can help you make some extra money. The downside of flipping homes is finding a way to afford your first project. If you are interested in this and need money for it, have you considered using the equity in your home? Your home's equity might be enough to cover your project or help you get started, and here are a few things to know if you want to begin.
Calculate Your Equity
If you are not sure if an equity loan is right for you, it might help if you calculated how much you have. The equity in a home is simple to find if you know the home's value and the loan balance. When you have these amounts, subtract the loan balance from the value to reveal your equity. If you have a substantial amount, contact a bank, and ask for a home equity loan. One thing to note is that your bank might not give you 100% of your home's value. Instead, they might loan only up to 80% or 90% of the value. Therefore, you might not be able to get all the equity in your home.
Use a Hard Money Loan for the Rest
Using an equity loan is helpful to get started with a flip project, but it might not offer enough cash. If you still need more money for the project, you might be able to get it by contacting a hard money lender.
Hard money lenders issue short-term loans called hard money loans. Investors often use these loans to fund their real estate projects, and they are ideal for house flips. These loans typically have higher interest rates than other loans, so keep that in mind when applying.
Before you apply for one, it might be helpful to complete a few steps:
- Check your credit as most hard money loans require high credit scores.
- Look into other options in loans to find out as much as possible about your options.
- Create a plan for the flip to show the hard money lender.
Spending time preparing for getting a hard money loan is helpful, and you might also want to learn more about hard money loans.
If you have any questions about getting an equity loan or hard money loans, talk to a lender that specializes in these loans to learn more.Share