California Hard Money Lenders
California hard money lenders, also known as private money lenders, provide loans secured against real estate. Borrowers typically decide to use the services of California hard money lenders because they either need quick financing to close a deal or they have current issues that are preventing them from being able to get a conventional loan.
Hard Money Loan Rates California
Hard money loan rates in California are typically lower than in other parts of the country. The large amount of California hard money lenders creates competition which brings down hard money interest rates and fees. Hard money lenders in Southern California, especially San Diego and Los Angeles, are numerous with the majority of these lenders focusing on fix and flip loans. There is also a concentration of hard money lenders in Northern California, particularly in the San Francisco Bay Area.
Expect hard money loan rates in California to be in the range of 8-10% for a 1st deed of trust.
Business Purpose vs. Consumer Purpose
All California hard money lenders will lend for non-owner occupied business purpose scenarios. This would include purchases or refinancing of investment property such as rentals or fix and flip projects. There are few California hard money lenders who can provide owner occupied hard money loans or consumer purpose hard money loans. These types of loans require additional licensing and are more complicated to process due to the current federal regulations.
How do Hard Money Loans in California Work?
California hard money loans are similar to traditional mortgages as they are both secured against real estate with a note and deed of trust. The hard money loan goes through the same process as a traditional loan with escrow and title insurance. Hard money loans are typically short-term financing and predominantly asset-based.
Hard money loans for both consumer purpose (owner-occupied and personal use) and non-consumer purpose (investment or business use) are available. Consumer purpose loans will have additional requirements in order to meet the current federal regulations.
- Free consultation with California hard money lender to discuss loan scenario
- Apply for hard money loan
- Provide needed documentation
- Receive hard money loan approval
- Hard money loan is processed and funded within 5-7 days (2-2.5 weeks for consumer purpose)
- Make monthly loan payments
- Pay off hard money loan balance through refinance, cash payment or sale of property
How do I Apply for a Hard Money Loan in California?
The applicant will need to complete an application provided by the California hard money lender. Additional documentation may be required based on the type of hard money loan being requested. Consumer purpose hard money loans will be required to provide income verification to ensure they meet the debt to income ratio. Trust loan borrowers will need to provide a copy of the trust and other trust documentation.
What are the Benefits of a Hard Money Loan?
The main benefits of a hard money loan are speed of funding and flexibility.
Speed of funding – Hard money loans can be funded within 5-7 days for investment or business purpose loans. Consumer purpose hard money loans can be funded within 2 to 2.5 weeks. Conventional lenders typically take 30 days with refinance loans taking 30-60 days and sometimes longer. Conventional loans for investment or commercial property can take 2-3 months.
Many hard money loan borrowers obtain a quick hard money loan and then refinance once they have secured the property.
Flexibility – Hard money loans are useful in situations where the loan scenario doesn’t conform to a conventional lender’s relatively strict criteria. Hard money lenders can overlook issues with a property that would prevent a conventional lender from providing financing such as missing flooring or an attached tax lien. Hard money lenders can also overlook issues related to the borrower such as less than perfect credit scores, previous bankruptcies or foreclosures. or
California hard money loans also require much less documentation compared to traditional loans.