California Hard Money Lenders
There is a strong demand for housing in California. That’s the good news. The bad news is that few can afford it. The market has spiraled out of control, leaving investors looking for other solutions. Many are turning to hard money lenders.
The demand for housing in California.
The California Association of Realtors says that essentially all of California is going crazy right now. The demand for houses has spread to strange levels. That’s the good news because it means that if you’re an agent working in that area, you have a lot of potential clients who want your services.
And the bad? Few people can buy most of the houses currently on the Californian market. They are unaffordable.
The joke in the real estate industry is that if you want to buy a house in California, sure, you can buy a box. Relatively recently, Los Angeles real estate news traveled the country comparing results of $100,000 properties. In suburban Detroit, you could buy a castle for that amount; in Ft. Lauderville, an orange village; in Chicago, an impressive condominium near the lake; and in Manhattan, 200 feet. from the earth. California was no better off with maybe a small parcel that you could rent from an honest owner with plumbing and utilities included.
Of all the areas in California, San Francisco is the most expensive place in the country to buy with a median sales price of $1,312,500, according to the California Association of Realtors (CAR). The rest of ‘this golden city’ is not much better. In Los Angeles, the median home price is $486,310. But homebuyers who want to live in the most desirable areas of Los Angeles will pay a lot more, and inventory is tight.
And then you’ll need a loan…
Government-backed conforming loans are capped at $625,500 in high-priced areas. So unless investors can make a substantial down payment to qualify for a loan from Fannie Mae, Freddie Mac, or FHA, the only way many Californians can finance their mortgage will be to consider other alternatives.
One of these would be to visit hard money lenders
Hard money lenders: what are they?
More than half of all hard money loans originate and close in California, and the number of hard money lenders living and bidding from this expensive city is growing all the time.
Hard money lenders are independent lenders who dole out their own money to people who need a loan. The money depends on the value of the collateral rather than the credit history or FICO score of the borrower. Other advantages are that the process is simple and fluid, the personal environment, the loan schedule and the flexible terms; and the process as fast as two days. (Some borrowers are actually billed the same day.) Disadvantages include a low loan-to-value ratio (as low as 50% to 60%), which means your property may be valued at much less than it is. And you have to pay high interest rates. If you don’t pay, you risk losing your property. For these reasons, many consider applying for hard loans only if they absolutely need them and cannot obtain the loan through traditional means. They then apply for the loan if they need the loan in the short term and are confident that they will be able to repay it.
Hard Money Lenders in California
Get ready for hours of browsing. Hard money lenders in California are a group apart. In fact, many hard lender directories add an additional page for lenders in California. You’ll find as many as 200 or more if you take the time to research and use multiple engines. Lenders find California to be an exciting market, no wonder with its high prices and growing demand! The advantage for you is that you will find reasonably competitive prices. Be prepared to negotiate over hours, schedules, and fees. And always investigate credibility. Lenders in California must obtain a license through a California regulatory agency and through the National Mortgage Licensing System (NMLS).
Apart from that, make a business plan that describes how you want to use the money and decide what loan you want. Lenders serve different clients and provide various loans.
The summary is this…
Housing costs in California are notoriously high, leading professionals to consider buying instead and seeking loans to ease the process. The biggest challenge for these borrowers is not income, but having enough money for the exorbitant down payment. (This can sometimes be as high as 20%). Alternatives such as a provisional hard loan could be useful; many borrowers tend to snag a bank loan later to verify payments. You will want a wise and trustworthy broker who can help you make one of the most important decisions of your life.
Hard money lenders in California could be your answer.