The Differences Between A Traditional Bank and a Local California Hard Money Lender

Post Category : Lending


Anyone who has been around the real estate profession for any amount of time – even people buying their first homes – know that it can be one of those “hurry up and wait” type of experiences. Once a property is on the buyer’s radar and a purchase decision is made, then it’s time to get all the offer papers filled out and submitted to the seller.

It’s easy to understand in today’s climate why this is so. Real estate agents know that a good piece of property can command multiple offers and often the first good offer to be submitted is the one that wins the day…or at least wins the first round.

All too often, with accepted offer in hand, buyers and real estate agents then start to play the waiting game while a conventional lender or bank goes through the process of final loan approval. I’m going to point out several differences between these lenders and hard money lenders in California as I go into the various approaches to loaning money on California real estate, and here’s the first one.

Hard money lender stresses customer service

As an experienced provider of California hard money loans, Evoque Lending has developed an approach to and system of customer service that delivers fast answers to our clients. We make all our decisions in-house, and handle all the necessary forms and paper work ourselves so that when we make a hard money loan on California property we don’t have to depend on others and their unpredictable and lengthy timetables.

Conventional lenders working here, as opposed to hard money lenders in Los Angeles and other parts of the Golden State, are often dealing with far-away loan committees and other departments located in other states. This can be fine for many real estate transactions, but the weaknesses of dealing with a huge corporate lender become quickly apparent when problems arise or time suddenly becomes a critical factor. These are areas where hard money lenders in Los Angeles, San Francisco and other areas of California can come in and “save the day.”

In fact, for more than 15 years, Evoque Lending has been in the business of saving real estate purchases after conventional lenders have turned down a borrower’s loan application for one reason or another. I might add that often borrowers run into this problem even after they have been supposedly “pre-qualified” for the loan.

If you’ll give me a minute to leave the immediate subject of California hard money loans, let me tell you a little secret – and one of my pet peeves – about the so-called “pre- qualification process.” I think it’s fair to say that when you hear conventional lenders boasting about their ability to pre-qualify the loan for your dream house, it’s more of a marketing strategy than a financial or lending strategy.

As a hard-money lender in California, you might think I’m a little biased, but I believe that if you research this yourself you’ll discover the same thing. The pre-qualification process is only the first tiny step on a long road to being really qualified for a loan. There are many, many steps after your offer is in on a home and too many times borrowers are denied a loan after having been prequalified.

Okay, I’ll step down off my soap box now and get back into outlining many of the advantages a hard money loan gives Los Angeles, San Francisco and other borrowers throughout California.

California hard money loans and credit scores

One of the most important elements in approving a conventional loan is the borrower’s credit rating. If you’ve been following the real estate industry over the last several years, you’ll know that regulations have essentially forced banks and other conventional lenders to require higher and higher credit ratings before they approve any loans.

Hard money lenders – California based, or elsewhere – are not under the same constraints as these lenders. We successfully fund hard money loans for borrowers who do not meet the minimum credit rating qualifications for banks and other conventional lenders.

Let me back up for just one second. As guidelines for credit ratings were increasing in recent years, there was something else going on in our economy as well, and we call it a recession. Anyone working in any sector of the economy felt the impact of the recession. Further, after the recession was officially over, the economy continued to be in a bit of a slump for quite some time.

Frankly, we are very fortunate in California that jobs seemed to return here fairly quickly and in addition to that, our real estate property values have done an extraordinary job rebounding. Yet for a variety of reasons, conventional lenders seem to think that real estate in California – including Los Angeles real estate, Orange County real estate and real estate in the San Francisco Bay Area – is still problematic when it comes to writing loans.

Independent hard money lenders in Los Angeles

Fortunately, as one of the top independent hard money lenders in the Los Angeles and Southern California area, Evoque Lending is able to respond more quickly to actual market conditions and specific borrower situations. We have been able to properly gauge the turnaround in the real estate market and we also know that a lot of the folks being denied conventional loans today are just victims of the economic downturn.

But even more importantly, we know that many of these borrowers who are saddled with a low credit score today are actually in very strong financial situations: it’s just that their credit scores don’t yet reflect that fact. When you’re sitting on a far-away, corporate loan committee, it’s impossible to understand this. But when you’re a California hard money lender, like Evoque Lending, and you’re sitting across the table or desk from the borrower, you can better understand the situation.

This is why an arbitrary credit score isn’t how approval for California hard money loans is determined. There are really two major elements for California hard money lenders when they make their final decision on a potential borrower’s loan application, and these are:

– The ability of the borrower to meet his or her obligations, and

– The value of the property.

You see, neither of these two main factors have anything to do with a credit rating. It’s a fact that today a lot of solid borrowers are recovering from going through a time in their lives when they were stuck with a low credit rating. At Evoque Lending we know that we need to look beyond the credit rating. After all, even corporate bankers will tell you that you can’t tell if borrowers can make their payments this month based on a credit score that reflects things that have happened many years ago.

By the way – and I need to do a follow-up article on this subject – many people who want to buy their first home, get into investment property, or refinance existing real estate, discover that a California hard money loan gives them the means to boost their credit scores and finally get back into the “good graces” of the conventional lending industry. In fact, using hard money loans, Los Angeles residents with credit score problems are often able to buy property and quickly secure conventional loans.

Local experts facilitate California hard money loans

By having our office staffed with local experienced experts, we are able to give our borrowers the individualized and timely assistance they need. Evoque Lending can give you the answer you require within 24 hours. This is one of the best aspects when working a hard money lender – San Francisco, Los Angeles and California residents soon discover.

In addition to a quick – and final – answer on your loan approval, we are able to fund California hard money loans within seven to 10 days. Being able to fund your hard money loan so quickly can truly save the day. I can’t tell you how many clients we have had over the years who thought their California real estate deals were going to fall through, but we were able to make them happen.

Property value and California hard money loans

While there is more I could say on the efficiency of our loan approval process at Evoque Lending, I need to go over the other critical component of assuring approval for your loan, and this point revolves around the value of the property you want to buy or refinance and the amount of equity you will have in the property.

Let me take a moment to expand a little on the second bullet point I made above. At Evoque Lending, our borrowers typically have around 40 percent equity in their properties when all is said and done. With this background, you probably see that as California and Los Angeles hard money lenders, we take great care getting the best appraisals of the properties our borrowers bring to us. And in the final analysis, this serves our clients as well; they need to have the best, unbiased information about the real value of the property they are buying or refinancing. Sellers always want to get top dollar for their real estate, and this is understandable, but no one wants to pay more than a property is worth in today’s market.

Further, we find that when borrowers have enough equity in their property, they are better motivated and do a better job managing their property as well as their finances. They become smart buyers who are able to position themselves to achieve the financial security that they’re looking for.

Real estate professionals and California hard money lenders

If you’re new to California hard money loans, or maybe even buying real estate in general, let me tell you something that should encourage you: At Evoque Lending, some of our best clients come to us through their real estate agents. Professionals in the real estate industry know that hard money loans for California real estate are often the best way to get a family into the home they want.

I’ll be totally honest with you, while these real estate agents want to do everything they can for their clients, they also know that their commissions depend on the sale going through. In other words, they know that when they really need help to save a real estate deal, Evoque Lending can get the job done.

I don’t think there’s any better testimony to our ability to write hard money loans for Los Angeles real estate – as well as real estate all around Southern California and in the San Francisco area – than the fact that professionals in the industry come to us when they need help. When they need their top hard money lender, Los Angeles real estate professionals pick up the phone and call Evoque Lending.

You can do the same.

Are you currently in the middle of a real estate purchase that you think is running into some roadblocks at the bank? We’re here to help you break past those roadblocks. I’ve tried to go over some of the basics of hard money lending in California, but there is more to say. And of course, your situation is unique. Please give me a call or write the essential details in an email. If you can make that simple step, I’ll take it from there.