When you are applying for a construction loan there are certain tips a borrower should keep in mind if they want to get approved—especially if you are trying to get private hard money in California.
If you are looking to invest in flipping houses, California is not a bad place to do it right now with a population of 39 million and growing. According to studies, California is the 17th fastest growing state in the country at .9 percent a year. Tack on the state’s natural beauty, space, and favorable climate and it is not hard to see why people want to live there—and in houses.
This, of course, means that lenders are going to be kept busy, traditional and private. With private hard money in California easier to come by and quicker for construction loans it can be helpful to know some tips that will help get your application approved faster.
Five Tips That Will Help You Get Your Construction Loan Approved
When it comes to getting your construction loan approved—whether its private hard money in California or elsewhere—you want to do whatever you can to make sure nothing holds up your loan. The following are five tips that can help you get your loan approved:
• Location: When choosing a lender, it helps to get one that is local to you or to the area where your construction project is. That way you are more likely to get someone who has a connection to the community and is emotionally invested in seeing the area improved.
• Down Payment: Private hard money lenders are going to want to know you’re invested in the property as well, and since you are getting a private loan rather than a traditional one, the requirement is going to be higher. Do your homework before choosing a lender, and make sure you can meet the equity requirements the lender has before applying.
• Lot Lien: It’s a good idea to ask your lender if they want some of the lot’s costs included in the loan or not. Most prefer to have the construction loan exclusive from the lot or at least subordinated to the first position private-money deed of trust. Make sure you talk to the lender before applying to find out what they prefer or are comfortable going with.
• Builder’s/Subcontractors Draw Process: be familiar with it. On some occasions, lenders like to pay builders directly once they complete a site inspection. In such cases, they will often require a title company be involved, and lien waivers acquired before they pay the builder and any subcontractors involved.
• Rate and Fees: Be familiar with what they are and what they can be. Talk to your builder before applying for a loan with anyone to make sure he or she is comfortable with it.
What you will need to do to get approved for private hard money in California is be able to prove that you bring value to your side of the table. Lenders want to feel like they are going to get their money back and that confidence will come mostly from how much they believe in the borrower.
The more knowledgeable the borrower appears, the more confidence the lender will have in them.
Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true.
Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.