Today’s California lenders often demand a lot of information and time from their clients. Most institutions will only give loans to people that have excellent credit and relatively high incomes. To make matters worse for consumers, lenders can take weeks deciding whether to extend loan offers.
Avoiding traditional loans and focusing on hard money loans can make it much easier for people to access the money they need for expenses like medical care, car repair, and real estate.
What Is a Hard Money Loan?
Hard money lenders don’t care about a person’s credit history, credit score, or proof of income. They only care about collateral. As long as the borrower has enough collateral to cover the loan’s value, the person can get the money quickly.
In many cases, people can use the item they plan to purchase as collateral. For example, if a real estate investor needs money to purchase, improve, and sell a house, the house fills the role of collateral. Keep in mind that lenders will not offer more money than the property’s value. If the property has a $100,000 value, then it’s only possible to get a loan up to $100,000.
The lender, however, needs to know that he or she can sell the collateral for the loan amount.
The option to use real estate as collateral makes hard money loans particularly attractive to people who flip houses for profit. Instead of risking their own money, they can borrow money to buy property. Assuming that real estate investor sells the home for a significant profit, they can still earn cash after repaying the loan and its interest.
The Benefits of Hard Money Loans
Hard money loans have several benefits that make them more attractive than traditional loans and mortgages.
It’s Easier to Get Approved for a Hard Money Loan
Hard money lenders don’t need to evaluate your creditworthiness. They just need to know that borrowers own property that covers the value of the loan.
People who get turned away by traditional lenders often find that they get approved by hard money lenders.
Borrowers Use Collateral for Their Loans
Since hard money lenders don’t care much about income levels and credit scores, they rely on collateral to protect their investments.
Hard money lenders typically try to keep their loan-to-value ratios fairly low (between 50% and 70%). Borrowers, therefore, can access up to 70% of an investment property’s current value. If borrowers need to borrow more money, then they can use other assets as additional collateral.
Common types of collateral include:
By using a combination of property as collateral, borrowers can increase the amount of money they get.
Hard Money Loans Have Flexible Terms
Since hard money loans come from private lenders, borrowers can negotiate flexible terms that benefit them. For instance, a borrower may request a custom repayment schedule or to avoid origination fees.
Most hard money loans are short-term loans that get repaid within 5 years. Borrowers and lenders can negotiate to find a loan term that meets both of their needs.
Borrowers in California Can Access Cash Faster With Hard Money Loans
By eliminating the lengthy approval process that banks use to decide whether they want to lend someone money, borrowers can access cash much faster by choosing hard money loans. The lender may want to take some time to evaluate the collateral’s value. The evaluation process usually takes much less time than the approval process that traditional lenders use.
Request a California Hard Money Loan with LenderMatrix
Traditional lenders don’t offer hard money loans. Instead, borrowers need to find private investors or private investment groups. Unfortunately, beginning real estate investors may not know where to find the hard money loans that they need to purchase properties. Luckily, LenderMatrix makes it easy for anyone to request a California hard money loan. Borrowers can simply register for a free account and submit your Initial Funding Request–there are no upfront costs or fees.