With so many banks and private lenders advertising loan solutions, it can be tough to figure out which one is right for you.
But when you need a loan quickly, or when you can’t or don’t want to use traditional routes to obtain your loan, your choices are drastically reduced.
That’s where California hard money loans come in.
If you’re wondering what a hard money loan is, and whether it’s the right choice for you, keep reading to learn more.
What Is a Hard Money Loan?
A California hard money loan is one that comes from a private investor or lender. Rather than requiring perfect credit, a perfect property and easily provable income, a hard money loan often only requires that you have sufficient equity in the property being used as collateral.
Most often, that collateral is the real estate that the borrower needs money for in the first place but sometimes the money is needed for other things like a business purpose loan or to buy or repair another investment property.
The nontraditional nature of California hard money loans makes them perfect for certain financial situations.
When Should You Apply for California Hard Money Loans?
When you find yourself in need of money, you have several loan options to choose from.
While California hard money loans can sound like an easy way to get money fast, they may not be the best choice for every situation.
Here are a few instances when a California hard money loan might be the right choice.
When Your Credit Is Less Than Perfect
One reason why traditional loans are not an option for some borrowers is bad credit.
If bad credit is keeping you from acquiring a traditional loan, you’re not alone. In fact, more than a third of all Americans have a credit score that’s below 601. That milestone, 601, is the mark that financial experts consider the line between fair and bad credit.
Most banks won’t even consider you if you have bad credit and many won’t consider fair credit either, which makes finding alternative funding a must.
While California hard money loans don’t always require a good history with past loans, if your credit is poor and you have paid other hard money loans as agreed, this can help when you need another hard money loan.
When You Need Money Fast
Applying for a traditional loan is a lengthy process.
They start with an application. After you fill it out and provide all necessary documents to the bank or lender, you then have to wait for it to be reviewed and processed.
If your application isn’t rejected outright during the review and processing phase, then the application passes to an underwriter. An underwriter will determine whether the bank or lender can offer a loan to the borrower, or whether more information is needed.
If the underwriter decides to offer you a loan, you’ll then have to deal with other details, such as mortgage insurance if your down-payment is less than 20 percent of the loan.
Even after all of these steps, you’ll still have to wait for the pre-closing and closing processes to be completed before you’ll get your money.
This process can take anywhere from 30 to 60 days and sometimes even longer, depending on how busy the lender is. If you need a loan fast, waiting through this long process isn’t an option.
With a California hard money loan, you’ll avoid many of these steps for obtaining a loan, and get the money you need fast.
When You’re Flipping a Real Estate Property
The speed of California hard money loans makes them ideal for certain situations when extra cash might come in handy.
Flipping real estate is one of those situations.
Whether you flip homes for a living or are just working on your own home, unexpected costs are sure to pop up from time to time.
Maybe you find damage in the home you bought that you hadn’t budgeted for originally. Or the project takes longer than you planned, and you have to pay workers for the additional time, or pay for extended equipment rentals.
When you need a money for a home-flipping project, a hard money real estate loan might be the best option.
When You’re Looking to Buy a Home
Even if you haven’t already purchased a property, California hard money loans may still be a good choice for your real estate needs.
If you begin planning to buy a home long before you need to make the purchase, you might have time to go through a traditional loan process.
But sometimes a great buy pops up unexpectedly. If you want to make an offer and snatch it off the market before someone else can, you’ll need money fast.
A hard money loan might be your only option for getting the money to buy the property that you have your eye on before someone else does.
When You Own Too Many Properties
Owning several properties that you rent out can be a great way to earn mostly-passive income.
But once you’ve acquired several properties, it’ll become more and more difficult to get approval for traditional loans in order to buy more.
In fact, once a person has four mortgaged properties, many banks aren’t willing to help them finance for another, even when many advertise that they can help individuals finance for up to ten mortgages.
You Already Have a Loan, But Need More Money
If you already have a loan, but find that the money isn’t enough for the project that you’re working on, you could try to get an increase.
Taking on a second mortgage on a property can be a major mistake.
Instead, a hard money loan allows you to get extra funding from an alternative source, protecting your credit and your investment.
You Aren’t Sure if a Solution Exists
Many times, people know that they need money and that they have a property or multiple properties with equity in them but don’t know how to put it together.
Hard money lenders tend to be more adept at seeing the solution than those who only do regular bank loans. We are trained to see “outside the box” and look for solutions.
Getting California Hard Money Loans
Whether you are looking to buy a home or investment property, or are flipping a home, or are having trouble getting a traditional loan, California hard money loans might be the solution.
California hard money loans help you get cash fast, even when your credit is bad or when you already have multiple mortgages. As long as you have collateral that you can place on the loan, you may be eligible.
If you’re ready to learn more about hard money loans, or to see whether you qualify, contact us today to learn more about alternative funding sources.