Thinking about borrowing money in California? If you are borrowing to purchase real estate or already own a property that you want to use as collateral, hard money loans may be an option for you. This can be a valuable financial tool for many potential borrowers in both the commercial and residential markets. Read on to learn more about hard money and the qualification requirements.
Before examining the requirements, it is valuable to understand what a hard money lender is. Traditional real estate loans are very strict. They are only available for certain property types and have significant qualification requirements. Additionally, traditional loans tend to move very slowly.
These shortcomings have created an increase in the number of hard money lenders. These loans are much more flexible. They can be used for almost any property type including flips and distressed properties. Additionally, they are easier to qualify for and turnaround much more quickly. Some hard money lenders also require smaller down payments.
The interest rates on hard money loans tend to be a little bit higher than on conventional mortgages. However, for some people, this is an acceptable tradeoff for the benefits and advantages of choosing a hard money lender.
Getting a Hard Money Loan in California
With hard money lenders California residents can get in on the state’s booming real estate market. If you are considering this option, you may wonder whether you are likely to qualify.
The truth is that the answer to this question varies from lender to lender and project to project. Naturally, different lenders have their own qualification requirements. Additionally, many hard money lenders consider the property as an important part of the equation. This is especially true for investment properties that are expected to generate income.
You can expect the qualifying credit score to be significantly lower. Borrowers with scores in the low 600s regularly qualify for hard money loans.
Depending on the loan type, the loan-to-value ratio may vary. Lenders want you to have some skin in the game. If you are flipping a house, you likely need to make a larger down payment than if you are buying your primary residence. After all, the roof over your head is certainly a good reason to keep making loan payments.
Some lenders can provide approvals as quickly as a single day with funding in under a week. So, you won’t need to expect the long, drawn-out process used by banks. The requirements for financial statements are often lower too. This is especially true for income-generating properties. In those cases, it is the value of the property that plays a primary role in the approval process.
Overall, hard money loans are much more flexible than traditional mortgages. With private money lenders Los Angeles homebuyers can achieve their real estate goals more easily. If you are thinking about buying a new property, look into the hard and private money lending options around you. You may be surprised by how much you can achieve with a more flexible borrowing option. Get started towards your real estate goals today.