If you’ve ever shopped for a loan or mortgage, you know how much of a difference your credit score can make. Higher scores can help qualify you for better terms, lower interest rates and special funding only offered to low-risk borrowers. However, nobody’s credit is perfect, and bad credit can take a long time to improve. If you’re interested in flipping houses but have bad credit, there are plenty of funding options available to help get you started.
Here are the best ways to get funding to flip regardless of your credit score:
Private Loans
If you have bad credit, a private lender might be a good option for funding a flip. The major reason to consider a private loan is that they come from sources who don’t follow the same rules and criteria as traditional financial institutions. Therefore, they might not weigh a credit score as heavily—some may not require a check at all. Because every private lender is different, it’s crucial to research the options carefully, so make sure you can still work within their custom requirements.
Home Equity
You can borrow against the equity of your current home to fund a new purchase. This includes cash-out refinancing, home equity lines of credit and home equity loans. The first option means you would refinance your current mortgage and keep the difference between the loans as cash. Home equity lines of credit work like credit cards to offer you money up front that’s borrowed against home equity. Home equity loans are like traditional mortgages, but use your property as collateral.
Crowdfunding
Crowdfunding is an excellent way to gather financing for a project from multiple sources, none of which require a high credit score. By using one of the major online crowdfunding platforms, you can set up a fund for your fix-and-flip purchase through contributions from people all over the world. Crowdfunding is the most flexible option but also requires some marketing savvy to be successful. If you’re willing to put in the work, this is an excellent option for financing your project regardless of credit.
While your credit score matters in many financial situations, there are ways to achieve your goals without a high score. No matter what kind of credit you have, these three options are great to consider for funding your flip.
About the Author
Hannah Sosinski
I started my career in the real estate industry at the age of sixteen and instantly fell in love.
I worked alongside one of the top producing agents in the country as their administrative assistant for nearly nine years before I took the leap to begin my own journey in the real estate industry.
Working alongside an agent who sells over three hundred houses a year educated me strongly on the Pittsburgh and greater Pittsburgh housing market. While working alongside this agent, I was lucky enough to be involved in several different types of real estate transactions and learned to properly determine home values, many aspects of negotiations and have learned how to close challenging deals while also handling a large amount of deals at the same time.
I have also spent the past seven years working as a property manager throughout Allegheny, Washington and Fayette County. I have managed everything from Section 8 to Luxury units.
Exploring the options of the real estate industry can be overwhelming. While working with me you’re able to sit back and relax as I have worked with many investors, home sellers and buyers and can help guide through the sale or purchase of your home and make it as easy on you as possible.
Whether you’re a first time home owner, downsizing, sizing up, looking to make your first/second or third investment, selling your home, etc. I can use my years of education to help guide you through the purchase or sale of the largest investment of your life.
I look forward to chatting about real estate with you!