Let’s say you’ve discovered the ideal house to buy and fix and flip. You’ve made sure you’ve done your due-diligence, made your perfect offer and got the property at an ideal price as long as you pay “cash” and close quickly, but you don’t quite have enough money on hand, so what are you suppose to do?
Our Orange County Hard Money Lenders say hard money loans help flippers in that same scenario. They are meant to assist investors and real estate house flippers who need to close right away and not go through the burden of a conventional bank loan.
So, how exactly can one get a hard money loan in Orange County, CA?
Who Can Qualify for Hard Money Loans In Orange County, CA?
Unlike conventional bank loans, our Orange County Hard Money Lenders say the key thing Orange County Hard Money Lenders are mainly on the look out for is the overall profitability of the deal the real estate investor is thinking about.
Banks place a great amount of time and focus on both the property as collateral and the buyer’s creditworthiness mainly due to the fact that they are lending as much as 97% of the property’s value.
If the buyer fails to make their mortgage payments, the bank can lose money due to the high Loan-to-Value or LTV.
Even though an Orange County Hard Money Lender wants to clearly understand who they are lending to by reviewing the flipper’s knowledge and experience, cash-on-hand, income and credit, their main focus is more on the property itself.
They will carefully review the value of the property, the extent of rehab that is planned for the home, and who the contractor is doing the work. Because of this, Orange County Hard Money Lenders will de-emphasize the credit and income profile of the borrower as a qualification for the actual hard money loan.
What Types of Projects Qualify for Hard Money Loans?
Generally, Orange County Hard Money Lenders require their borrowers to form some kind of entity (usually an LLC), rather than borrowing as a single consumer.
So, it’s crucial that you make sure your purchase contract is assignable to an entity or the contract is originally in the name of an entity that you have formed in the past.
Furthermore, a majority of Orange County Hard Money Lenders require the property to be non owner-occupied. This typically means that for the duration of the loan, the borrower can’t be living in the property covered by the actual hard money loan.
Next, you have to check with the Orange County Hard Money Lender to see if they lend in the particular state that your property is located. A majority of Orange County Hard Money Lenders don’t lend nationwide and most only focus on one specific state.
Here are a few good programs that exceptional Orange County Hard Money Lenders will engage in:
- Fix and Flip
- Cash-Out Refinance
- New Construction
Our Orange County Hard Money Lenders say the fix and flip is a well known revenue-generating strategy which typically involves the purchase of land or property, the development or renovation of it’s current status, and it’s resale at a price higher than the sum of the total project costs.
Orange County Hard Money Lenders say cash out refinance involves refinancing a current mortgage loan, where the new mortgage loan is for a bigger amount than the current loan – so you (or the borrower) get the difference between the two loans in cash.
The term “new construction” is generally used to describe a house that is currently being developed or has been completed but has never had any occupants.
Our Orange County Hard Money Lenders say each potential project has its own set of rules and circumstances, so it is essential to contact the Orange County Hard Money Lender to clearly understand if your specific project will even qualify for a hard money loan.
But, when you contact the Orange County Hard Money Lender, make sure to have all of the relevant facts of your deal ready to go.
How Quickly Can One Get a Hard Money Loan From An Orange County Hard Money Lender?
You can indeed get a hard money loan almost right away. This is one of the amazing benefits of going with an Orange County Hard Money Lender versus a traditional bank.
Typically, the first step is to get together all of your deal points and fill out a hard money loan application.
Within an average of a 10-minute meeting and conversation with the Orange County Hard Money Lender, being that you have the circumstances of your plan in a clear and organized fashion, they should be able to tell you whether or not it seems like the type of deal they are interested in moving forward with.
After submitting an initial application, and depending on the lender you are dealing with, your loan will go through an underwriting process in which the Orange County Hard Money Lender will review the contract, the proposed scope of work, overall deal structure and value, and any other pertinent information you provide them with.
The Orange County Hard Money Lender will want to involve an experienced appraiser to inspect and appraise your property as you proceed with the loan process, so as to avoid any misjudgments and to make your loan process more accurate and smooth.
Once the underwriter approves the loan, the Orange County Hard Money Lender has the opportunity to push the loan into the closing process instantly, which will be held at a title company or attorney’s office.
If you have all of your affairs in order, the usual Orange County Hard Money Lender can get through the complete process and fund within two weeks, but some are capable of closing as quickly as 2-3 days.
Overall, Orange County Hard Money Lenders say when thinking about a hard money loan for your project, it’s crucial to keep in mind whether yourself, your project, and your time frame will qualify your for a hard money loan.
If for some reason you do not meet some of the qualifications discussed above, it may be time to look into other funding options.
Orange County Hard Money Lenders say hard money loans are well known for their speed and flexibility, and they may be the perfect leverage for you to use in order to avoid the predicament that many house flippers find themselves in when they don’t have enough funding on hand for their desired project.