Private Money Lenders for
California Real Estate

North Coast Financial is a direct California private money lender based in Southern California. Financing private money loans for residential real estate investors and property owners throughout California, North Coast Financial also funds commercial private money loans for a variety of commercial property types.

One of the most experienced private money lending companies in California with over 45 years of private money lending experience and over $1 billion in California private money mortgages funded, North Coast Financial allows real estate investors to capitalize on investment opportunities by providing fast, flexible and reliable private money loans.

Contact North Coast Financial now for a free consultation with a California private money lender.

What is a Private Money Loan?

A private money loan is a loan secured against real estate with the source of funds coming from a private investor as opposed to an institutional lender. Private money is a faster and easier way to obtain financing compared to traditional lenders. Private money loans require much less documentation and have a much faster application process. Private money loans can be approved and funded within 3-5 days while traditional lenders can take 45 days or longer. Private money bridge loans for primary residences (consumer purpose loans) take 2-2.5 weeks to fund due to the current federal regulations.

Private mortgage lenders are individuals or companies that lend their funds to property owners with a note and deed of trust secured against the borrower’s real estate. Private money lenders for real estate typically require a higher down payment (or existing equity) than traditional lenders and have a higher interest rate. Private money lending is typically intended to be used for short-term financing (1-3 years).

Private Money Lenders in California

North Coast Financial provides private money loans in Southern California, Northern California and Central California. We fund throughout California and specialize in the areas of Los Angeles, San Diego, San Francisco Bay Area, Orange County, Riverside, San Bernardino, Ventura and Sacramento. Experienced private money lenders for real estate, North Coast Financial has the local real estate expertise and available capital to quickly fund private money loan requests throughout California. Call us for a quick quote with honest pricing and no surprise added junk fees.

Private Money Loans for Various Scenarios

Private money lenders are the go-to choice for experienced real estate investors in need of a quick and reliable source of funds to finance their residential and commercial real estate investments. North Coast Financial are private lenders for real estate projects including fix and flip loans, bridge loans, purchase loans, investment property loans, probate and estate loans, trust loans, cash out refinance loans , owner occupied private money loans, multifamily private money loans, private money 2nds, partnership buyout loans and other private money loans in California secured by real estate.

Private Money Brokers vs. Direct Private Money Lenders

Borrowers researching private money financing often come across two different kinds of companies: private money brokers and direct private money lenders. The two play different roles in a loan, and knowing the difference helps you understand who actually controls the money, the terms, and the timeline.

What a Private Money Broker Does

A private money broker is an intermediary who connects a borrower with a source of private capital. Rather than lending their own funds, a broker takes a borrower’s scenario, identifies lenders or private investors who might fund it, and arranges the transaction between the two sides. Brokers can be useful when a loan is unusual, difficult for most lenders to fund or when a borrower does not know which lenders handle their type of property or situation, An experienced broker often knows where a particular deal is likely to get funded.

Because a broker does not control the funds, the loan’s final terms, approval, and funding still depend on whichever lender or investor ultimately provides the loan. A broker may also charge a fee for arranging the loan, which is worth clarifying in writing at the outset so the total cost of the financing is clear.

How Borrowing From a Direct Lender Speeds Up Funding

A direct private money lender (such as North Coast Financial) uses its own funding source to make loans, so the same company that approves the loan is the one providing the money. This removes a layer from the transaction. When the decision-maker and the funding source are the same party, there is no need to shop the file to an outside lender after approval, which is one of the main reasons direct lenders can often move faster.

Speed matters in private money lending because these loans are frequently used for time-sensitive purposes such as a purchase with a firm closing date or a situation that needs to be resolved quickly. Working directly with the party that holds the funds also means clearer answers on what can be approved, since the borrower is speaking with the actual lender rather than a middleman relaying questions back and forth.

How to Find a Private Money Lender for Real Estate

Finding the right private money lender can take more than a single search. Because private lenders vary widely in the property types, locations, and loan scenarios they fund, part of the task is finding lenders who can fund the specific loan scenario. It is also necessary to confirm that a given lender is credible and reliable.

What to Look for in a Private Money Lender

Start by matching a lender to your specific situation. A private money lender that focuses on the property type, location, and loan purpose you need is more likely to fund your deal and to price it fairly. A lender active in California real estate, for example, will understand local property values and timelines in a way an out of statement lender may not.

Beyond fit, look at track record, reputation  and transparency. A lender that has funded many loans and can speak clearly about its terms, rates, points, and typical timelines is easier to work with than one that is vague about cost. It is also reasonable to confirm that a California lender or broker holds the appropriate real estate or lending license, and to look for references, reviews, or examples of past transactions that resemble yours.

Questions to Ask Before You Borrow

A short list of direct questions can quickly tell you whether a lender is the right match. Useful ones include:

• What loan-to-value ratio will you lend up to on this type of property?
• What is the interest rate, and how many points do you charge?
• What third-party fees should I expect and can you itemize them?
• How quickly can you realistically fund? Is there a prepayment penalty if I pay the loan off early?

It is equally important to ask about the lender itself. Confirm whether the company lends its own funds or brokers the loan to an outside source, since that affects speed and who makes the final decision. Ask how long the lender has been making these loans and whether it has funded similar scenarios before. Clear, specific answers are a good sign; evasive answers or pressure to move quickly without documentation are reasons to be cautious.

Private Investor Loans for Real Estate

Private money loans are sometimes referred to as private investor loans. It is real estate financing funded by a private individual or group rather than a bank. These loans are one of the main sources of private money in the market, and they give borrowers an alternative when a conventional lender cannot or will not fund a deal.

How Private Investors Fund Real Estate Loans

Private investors provide capital that is secured by real estate. In practice, an investor lends money to a borrower and records a deed of trust on the property as collateral, along with a promissory note setting the interest rate and repayment terms. Because the loan is backed by the property itself, investors focus heavily on the value and equity of the real estate and on the borrower’s plan to repay. There is less scrutiny on income and credit the way a bank does. But the borrower must have a reasonable exit strategy.

Investors are often willing to fund loans that fall outside conventional guidelines, such as short-term loans, unusual properties, or borrowers who need to close quickly. In return for taking on that flexibility and the shorter timeline, private investor loans generally carry higher interest rates and upfront points than a conventional mortgage. Some borrowers work with a single investor, while others are funded through a lender or fund that pools capital from multiple investors and manages the loans on their behalf.

Private Money Lenders Interest Rates

Private money lender interest rates are higher than interest rates available from long-term conventional lenders. Private lender interest rates are higher as the loans are for short-term use (1-3 years) and may be considered higher risk. Private money lending rates will fluctuate based on the loan to value, the type of the loan being requested and the overall perceived risk involved.

Private Lending Rates Today (2024)

Private lending rates today are higher than the lows seen in 2020-2022. While traditional interest rates have tripled for some lending products, private lending interest rates have only increased marginally. Private money lending rates today are currently in the range of 9.5-12% for a 1^st position loan. 2^nd position loan interest rates range from 12-14%.

Private Money Lending Rates for California

Private money lending rates in California are typically lower than private money interest rates found in other states. This is because there are many private money lenders in California and the increased competition results in lower interest rates. California is also typically considered a relatively strong real estate market which can reduce the perceived risk of funding loans in the state.

What is a Private Money Mortgage?

A private money mortgage (private money loan) is similar to a conventional home mortgage most people are familiar with. A loan is provided to a borrower with residential real estate serving as the collateral for the loan. The main difference is that with private money mortgages the source of funds is from private investors (private money lenders) as opposed to banks and credit unions.

Private money lenders for real estate are less concerned with credit scores and income history. They primarily focus on the value of the property as well as the amount of equity the borrower has in this property. The focus on value and equity provides a great deal of flexibility that allows for private money lenders to approve and fund loans very quickly. The fast approvals and funding is the main reason real estate investors utilize the services of private money lenders for their residential real estate financing.

Private money lenders typically require a down payment of at least 25%. This down payment requirement is often higher than what is required from banks and credit unions but the trade off is that private money lenders have far fewer requirements for loan approval. They are also able to overlook poor credit or other issues on a borrower’s record such as foreclosures, bankruptcies and short sales.

Private money lending is for short-term use only. Borrowers must have an exit strategy or two for the private money loan when they are applying for it. Terms of up to 3-4 years are generally available. Common exit strategies for private money loans include refinancing with a long-term conventional loan or selling the property.

Private money lending companies have higher interest rates than traditional 30-year bank loans. Private money lender interest rates can range from 8-12% depending on the lender, borrower, specific property and loan to value being requested. While the private money loan interest rates are higher compared to bank loans, the flexible lending criteria and quick funding is worth the added expense, especially for real estate investors looking to take advantage of a limited-time opportunity. Because private money mortgages are only available for shorter terms, the interest expense often isn’t significant over the course of the entire investment.

California private lenders typically change lower interest rates than private lenders in other states. There are many private money lenders in California and the increased competition pushes the interest rates down.

How to Obtain a Private Money Loan from North Coast Financial

Applying for a private money loan from North Coast Financial is quick and easy. The borrower simply needs to submit the private money loan application. Once North Coast Financial receives the application they will review and then notify the borrower whether or not their private money loan request has been approved. The approval process is often completed the same day the application is received.

Once approved, North Coast Financial can fund the loan in as few as 3-5 days for investment property. Owner occupied loans typically take 2.5 weeks due to the current federal regulations that all lenders must comply with.

Loan approval is primary based on the current value of the real estate being used as collateral and the borrower’s equity in the real estate. Current credit scores, bankruptcies, foreclosures, short sales, loan modifications and other issues on a private money borrower’s record are not major concerns for private money lenders as long as the borrower has a significant down payment or equity in the real estate.

Once the private money loan is approved and ready to be funded, North Coast Financial gets to work quickly and works closely with the borrower throughout the entire financing process. North Coast Financial prepares all of the necessary disclosures and loan documents and answers all questions along the way.

When escrow is ready for funds, North Coast Financial will have the funds wired to escrow so the deal can be closed.

Private Money Home Equity Loans

A private money home equity loan is a fast and convenient way for a homeowner to access funds by borrowing against the equity within their home. North Coast Financial is able to provide private money home equity loans for both business and consumer purpose. For consumer purpose private money loans, the homeowner will be required to prove their income as required by the current federal regulations. The homeowner will also need to remain below a debt to income ratio with the new private money loan.

Private Money vs. Hard Money

In the eyes of most lenders and borrowers, there is little to no difference between a private money loan and a hard money loan. In both cases, the source of the funds is a private investor outside of the conventional banking system and the loan is secured by residential or commercial real estate. Some may refer to “hard money lenders” as established companies that offer their lending services, while a private money lender may refer to an individual investor who is willing to loan their personal funds.

Regardless of the distinction between the similar sources of funds, the process of creating the loan is generally the same. In both cases the loan needs to have the required disclosures, documents and go through the necessary processes to ensure the loan is closed properly. A private money loan originated by an experienced and licensed mortgage broker will ensure everything is done legally so all of the involved parties to the loan are protected.

Contact North Coast Financial now for private money loans in Southern California, Northern California and Central California. We specialize in Los Angeles, San Diego, San Francisco Bay Area, Orange County, Newport Beach, Riverside, San Bernardino, Ventura and Sacramento.