There is a strong demand for housing in California. That is the good news. The bad news is that few can afford it. The market has exploded out of control, leaving investors to consider 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 by now. The demand for houses has spread to strange levels. That’s the good news because it implies that if you are an agent working in that area, you have a lot of potential clients who want your services.
And the bad guy? Few people can afford most of the homes 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. Comparatively recently, Los Angeles real estate news traveled across the country comparing the results of properties for $ 100,000. In the Detroit suburbs, you could buy a castle for that amount; in Ft. Lauderville, an orange villa; in Chicago, an impressive condo near the lake; and in Manhattan, 200 feet. from the earth. California was no better with maybe a small parcel that could be rented to an honest landlord with plumbing and utilities included.
Of all 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 home buyers who want to live in the most desirable areas of Los Angeles will pay significantly more, and inventory is tight.
And then you will need a loan …
Compliant government-backed loans are capped at $ 625,500 in high-priced areas. So unless investors can make a substantial down payment to qualify for a Fannie Mae, Freddie Mac, or FHA loan, the only way many Californians can finance their mortgage is to consider other alternatives.
One of these would be visiting hard money lenders
Hard Money Lenders: What Are They?
More than half of hard money loans originate and close in California, and the number of hard money lenders living and bidding in this expensive city is growing all the time.
Hard money lenders are independent lenders who distribute their own money to people in need of a loan. The money depends on the value of the collateral rather than the borrower’s credit history or FICO score. 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 receive a turnover on the same day). Disadvantages include a low loan-to-value ratio (as low as 50% to 60%), which means that your property may actually 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 loans on strict terms only if they absolutely need them and cannot obtain the loan through traditional means. Then they apply for the loan if they need the loan in the short term and are confident that they can repay it.
Hard money lenders in California
Get ready for hours of sailing. The hard money lenders in California are a group unto themselves. In fact, many permanent lender directories add an additional page for lenders in California. You’ll find up to 200 or more if you take the time to research and use multiple engines. Lenders consider 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 hours, time, and rates. And always research credibility. Lenders in California must be licensed through a California regulatory agency and through the National Mortgage Licensing System (NMLS).
Other than that, make a business plan that will describe how you want to use the money and decide what loan you want. Lenders serve different clients and provide various loans.
The short is this …
Housing costs in California are notoriously high, prompting professionals to consider buying instead and seeking loans to make the process easier. 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 an interim permanent loan may be helpful; many borrowers tend to take out a bank loan later to verify repayments. You will want a smart and reliable broker who can help you make one of the most important decisions of your life.
The hard money lenders in California could be your answer.
