If you’re looking for a loan in the state of California, there are a large number of reasons why a hard money loan might be the perfect solution for you. Hard Money Lenders in California are able to operate with a degree of flexibility unavailable to conventional lenders, like banks, who must comply with a wide range of restrictions that do not apply to Hard Money Lenders. Here are just a few reasons why you should reach out to a hard money lender in California today to discuss your personal or business financing needs.
One important benefit Hard Money Lenders have over conventional lenders is their ability to look beyond the credit score to consider other aspects of a potential borrower’s situation. For example, Hard Money Lenders typically place a greater emphasis on the loan-to-value ratio of the collateral property than a potential borrower’s credit score. This makes Hard Money Loans an ideal solution for potential borrowers who may have encountered credit problems in their past–oftentimes due to circumstances beyond their control–but who may possess equity in their property.
What is the loan-to-value ratio? It is a tool that Hard Money Lenders use to gauge the amount of equity remaining in property and, by consequence, how risky a given loan would be. For example, if a potential borrower owns a property worth $100,000, but that property has a $50,000 mortgage on it, the loan-to-value ratio would be calculated by dividing the $50,000 outstanding mortgage balance by the $100,000 property value, for a loan-to-value ration of 50%.
The higher the loan-to-value ratio (LTV), the greater the risk to the lender, as a higher LTV translates into less of an equity cushion should the property value decline during the life of the loan. However, this emphasis on LTV over mere credit score means that Hard Money Lenders in California can make loans to many potential borrowers who would be turned away by conventional lenders, even though those potential borrowers may possess considerable equity in their property.
Hard Money Lenders also strive to meet borrowers’ needs by offering a wide variety of loan types, with a much broader range of options than can be provided by the typical conventional lender. For example, we offer short-term bridge loans, fix & flip loans, second and third mortgages, construction loans, and more. Because we are better able to consider all aspects of a potential borrower’s situation, including a borrower’s specific plans for a given property, we are able to offer loans in situations where conventional lenders cannot.
Our greater flexibility allows us to offer more than the usual cookie-cutter, one-size-fits-all lending options available through conventional lenders like banks. In fact, Hard Money Lenders often make bridge loans specifically intended to cover the gap while otherwise qualified borrowers go through the onerous process of securing longer-term, conventional financing with a major financial institution. Similarly, we are able to offer second and third mortgages on properties that we consider to have sufficient equity, where conventional lenders would decline to do so.
One of the major ways in which Hard Money Lenders are able to offer significantly more flexibility than conventional lenders is through their ability to lend on a wide range of properties that might not fit within the strict, narrow requirements under which conventional lenders operate. Hard Money Lenders in California make loans on both residential and commercial properties, as well as some owner-occupied properties.
By looking at underlying factors such as loan-to-value ratio and cash flow, Hard Money Lenders are able to see value and opportunity where more narrowly-focused conventional lenders do not. This can be of enormous benefit to potential borrowers who own or wish to secure financing on properties that do not fit the cookie-cutter standards of conventional lenders, or whose businesses may not perfectly fit the models those lenders prefer.
Too often, with conventional lenders like banks, borrowers are made to feel less like the valued customers they are and more like a beggar in search of a handout. Because Hard Money Lenders are able to search out opportunities where conventional lenders are not, we are accustomed to really getting to know our borrowers, their goals and ambitions, their businesses, and their properties, which allows us to provide lending products uniquely tailored to their particular circumstances. Where conventional lenders might see too much risk due to uncertainty or a non-standard type of property, we look for an opportunity with the motto that we are trying to find ways to accommodate potential borrowers rather than reasons to reject them.
If you have attempted to obtain a loan through a conventional lender but have been left with nothing but headaches for your efforts, Hard Money Lenders in California are your next best option. We stand ready to assist you in developing a loan that works for your individual situation. Where conventional borrowers look for reasons to say no, we look for reasons to say yes, taking into account the totality of a borrower’s circumstances, not just one or two numbers that could never tell the whole story of a person or a business.
As Hard Money Lenders in California, we work hand-in-hand with our borrowers to truly understand their lives, businesses, and properties, allowing us to see opportunities that others overlook and giving our borrowers the opportunity to thrive where others have denied them that chance simply because they did not fit the narrow criteria spelled out on a boilerplate loan application.
At Fidelity Funding, we stand ready to help fulfill your financing needs to the best of our abilities by offering loan products uniquely tailored to you. Contact us today to see how we can provide you with the financing you need to achieve your life and business goals!
Hard Money Loans are short-term loans that are typically secured by real estate. They can be used by investors to fix and flip property purchases (purchase and renovation of properties). Typically, an investor will purchase, renovate, and sell a property in less than a year. Hard Money Loans for flipping houses are excellent options for fix and flip projects since they enable the financing of properties that are in less than ideal condition.
Hard Money Lenders are individuals or private companies who lend money to investors with real estate as the primary collateral. Since, unlike banks, they are not regulated, property and borrower qualifications are more relaxed. Fix and flip investors find Hard Money Loans work well for the financing, renovation, and sale of a property. They can also be used for refinancing.
Hard Money Loans are sometimes called rehab loans. The qualifications for attaining them are lower and more flexible than traditional loans. The property and the potential profit it can turn are more relevant to lenders than a borrower’s background. Approval is generally quick. Hard money loan mortgages are intended to be short-term and interest-only.
Hard Money Loans differ greatly from traditional mortgages in a few key ways:
They can be used to finance distressed properties, single-family homes, apartment buildings, condominiums, etc. Loans are made based on a property’s loan to value ratio/after repair value ratio or loan to cost. After repair value is the expected fair market value of a property, originally underpriced, after it has been renovated.
Hard Money Loans are typically up to 75 to 80 percent of a property’s anticipated after repair value. At Fidelity Funding, we can offer up to 90 percent on loan to cost. As with traditional bank loans, investors should expect to cover closing costs, application fees, appraisal fees, and other associated expenses that come with the purchase of a property.
Most fix and flip investors aim to renovate and sell properties within three months to a year of acquisition. There is an expectation from the lender the property will be flipped, and the loan will be honored within a year when the property sells. Although the rates on Hard Money Loans for flipping houses are higher, funding is fast enough for investors to compete with cash buyers.
Fix and flip investors prefer Hard Money Loans because they both finance the purchase and renovation of investment homes. Such investors target houses in poor condition that, when renovated, will potentially sell for more than their market value. Short-sales, foreclosure auctions, and lender-owned REO properties are commonly financed as flip and flip projects.
Hard Money Loans for flip and fix projects are generally equal to a percentage of the property’s expected fair market value after renovations have been made. Once a property is purchased, investors begin renovations, taking money for repairs in the form of stipends or “draws” arranged as a line of credit by the lender. The need to float rehab costs between stipends is common.
Long-term investors look to finance and renovate properties as well. Where they differ from fix and flip investors is they aim to season properties before moving to refinance to a permanent mortgage. For long-term investors, the principal debt is paid when new long term financing is obtained.
Long-term investors typically purchase properties in poor condition. They aim to renovate the property and then rent it to tenants. Long-term investors who seek Hard Money Loans often cannot qualify for a conventional loan. Typical underwriting may present problems for borrowers who are considered credit risks because of judgments, tax liens, or other issues.
Hard Money Loans for flipping houses are popular with investors. They often prefer to attain a short term loan with quick pre-qualifications, and rapid funding timeframes and interest-only payments. The potential of quick turnover makes the expense of the loan a palatable trade-off.
Investors focused on attaining Hard Money Loans like they can finance the purchase of single-family or multi-unit properties. The ability to be competitive in a fast-paced sales market is essential. The rapid approval and funding time of Hard Money Loans makes them ideal for purchasing short-sales, REOs, and foreclosure properties.
No matter the timeline an investor has, Hard Money Loans are used for the same purpose, property purchase, and renovation. During the loan period, monthly payments are generally interest-only. Prepayment penalties are rarely a factor, so the loans can be paid off early if desired.
At the end of the day, Hard Money Loans for flipping houses are a useful tool for short-term fix and flip investors. The ability for Hard Money Lenders to offer shorter processing times for approval and interest-only payments to those wishing to purchase and renovate investment properties is highly beneficial to borrowers.
At Fidelity Funding, we are able to offer rates that are competitive to prime buyers. Investors can be pre-qualified within just minutes, and we can have you funded within five to seven days. Our criteria for investors is straight forward and hassle-free:
Fidelity Funding specializes in providing loans to almost every type of property, both residential and commercial. We are able to fund first, second, or third trust deeds and the provision of home equity lines of credit. If you are a new or seasoned flip and fix investor who needs a reliable lender for Hard Money Loans for flipping houses, contact us today to discuss your loan needs!
We look forward to partnering with you on your next investment project.
Phone: (877) 300-3007