The California real estate market has historically been high value and extremely diverse. A market that was once considered by many to be the quintessence of exclusivity among Hollywood superstars and affluent entrepreneurs has now evolved to include everyday homeowners and real estate investors alike.
But buying high-end real estate in California doesn’t come cheap, and current conforming loan limits hinder most buyers’ ability to purchase high value properties. Even with the baseline loan limit for a single family home expected to jump to around $800,000 in 2025, borrowers will find it difficult to finance California real estate purchases using traditional mortgage financing.
As sellers seek multiple million dollar offers for California properties, many borrowers wonder how to get a million dollar hard money loan as an alternative to traditional mortgage solutions. If you are looking to finance your next California real estate purchase and are wondering how to get a million dollar hard money loan, here is everything you need to know.
Hard Money Lending: An Overview
Hard money lending is a niche type of financing available to real estate borrowers that utilizes a unique asset-based approach to lending over traditional methodologies.
While traditional mortgage lenders put more emphasis on borrower characteristics (such as employment history and credit score) when approving a request for credit, the best hard money lenders in California focus more on the underlying real estate securing a hard money mortgage. This makes hard money lenders more flexible, even allowing them to offer California hard money loans for bad credit borrowers.
There are also several key differences that characterize hard money loans that make them unique compared to conventional mortgage solutions. If you are curious about how to get a million dollar hard money loan, you should first understand what sets them apart from traditional mortgage loans.
Terms and Rates
One characteristic that sets hard money loans apart from traditional mortgage solutions are their rates and terms. Hard money loans often come with the benefit of being both flexible and fast. But these traits come at a cost.
While they offer greater value, hard money loans do tend to have elevated interest rates compared to traditional mortgage loans. Another key difference is that the best hard money lenders in California typically keep the loan duration for hard money loans shorter.
A traditional mortgage lender will frequently offer mortgages with loan durations spanning fifteen to thirty years. Comparatively, hard money lenders in Northern California will usually offer hard money loans spanning shorter periods – typically one to five years.
Loan-to-Value Ratios
One of they key risk factors that both traditional mortgage lenders and the best hard money lenders in California consider when approving a credit request is the loan-to-value (LTV) ratio. Loan-to-value compares the loan amount being requested in relation to the collateral property’s value.
Generally, traditional mortgage lenders permit higher loan-to-value ratios compared to hard money lenders. The best hard money lenders in California normally offer loan amounts between 60-70% of a property’s market value. While there are a few exceptions, if you want to know how to get a million dollar hard money loan, make sure to pay close attention to the loan-to-value ratio.
Funding Speed
Funding speed is always something to consider when looking at how to get a million dollar hard money loan. One reason why California borrowers choose to use a hard money loan over alternative financing strategies is due to the rapidity of funding.
The best hard money lenders in California can approve hard money loan requests within a matter of days, enabling borrowers to capitalize on real estate opportunities without potential delays. In contrast, traditional mortgage lenders can take anywhere from 30 to 60 days to approve a traditional bank loan.
Prepayment Penalties
Another thing to think about when looking at how to get a million dollar hard money loan is what prepayment penalties hard money lenders in Northern California charge if you pay your loan off early. Almost all hard money lenders require three to six months of guaranteed interest.
While this can vary between lenders, you want to ascertain if a lender imposes a soft or hard prepayment penalty. A soft prepayment penalty gives a borrower partial credit for the months of interest already paid and imposing the difference. Conversely, hard prepayment penalties require the full amount, regardless on the amount already paid.
How to Get a Million Dollar Hard Money Loan in Three Simple Steps
Deciding how to get a million dollar hard money might feel like a bit challenging, but truth be told the process can be boiled down to just a few simple steps. Here are the steps required for how to get a million dollar hard money loan.
Step 1 – Find the Right Hard Money Lender
The first step for how to get a million dollar hard money loan is to research the best hard money lenders in California. When it comes to hard money lenders in Northern California, only a handful may be willing to write a loan for a million dollars or more or have the proper programs to accommodate your loan request.
Once you whittle your search down to a handful of potential candidates, the next step is to determine which lender has the proper expertise and credentials to best to partner with. When making your final selection, consider if your hard money lender offers:
- Prompt and professional service
- Quick approval decisions and funding
- Timely communication and follow through
- In-depth knowledge of California real estate trends
- Flexible hard money loan programs
- Transparent pricing and favorable loan terms
Step 2 – Apply for a Million Dollar Hard Money Loan
After you have selected one of the best hard money lenders in California to partner with, the next step is to identify the best hard money loan program that meets your real estate objectives and submit your hard money loan application.
While bringing an initial financing strategy to the table can help expedite the application process, your hard money lender can also provide guidance in structuring a strategy in the most efficient way possible. Ultimately, you want to move forward with a strategy that will best help you achieve our overarching financial objectives.
With the right financing strategy in place, the next step is to complete your application paperwork, gather and submit your financial and credit documentation (based on your hard money lender’s loan requirements), and have a sufficient play for repayment once your loan request has been approved.
Step 3 – Getting Approved and Coordinating Funding
After you submit your hard money loan application, the approval process should be extremely fast. Often the best hard money lenders in California will approve your credit request in as little as a few minutes. However, it’s still important to continue communicating with your hard money lender to avoid any funding related issues or delays. You will also need to coordinate the completion of your closing paperwork and disbursement of funds.
Million Dollar California Hard Money Lenders, Independent Lending
Knowing how to get a million dollar hard money loan can set you up for financial success. Hard money financing is an amazing tool that can be especially powerful for those purchasing higher-end properties in competitive markets like California.
Choosing the right Northern California hard money lender to partner with will make your hard money financing strategy that much more powerful. That’s why thousands of borrowers choose Independent Lending as their Northern California hard money lender.
Independent Lending has proudly been offering million dollar hard money loans to borrowers throughout California for over a decade. Known for offering sophisticated real estate financing solutions that are both unique and flexible, there’s no denying that Independent Lending is the best hard money lenders in California. With an extensive track record of helping clients achieve their real estate objectives, Independent Lending is the partner you want in your corner.
Check out any of our 5-star reviews on Google and Zillow below or contact us to discover how we can help develop a million dollar hard money financing strategy built to meet your needs!
