What is a Bridge Loan in California?
A bridge loan in California is most notably known as a short-term and quick financing solution that allows a borrower to fund their real estate investment projects. These types of loan programs are most noticeably used by real estate investors (both beginners and experts) and general contractors.
California bridge loan lenders have seen a massive uptick in both consultation and usage for construction within the commercial and residential real estate sphere.
From most professional lenders, a California bridge loan can be processed and funded in as short as 7 business days. Which is another great reason why many real estate investors utilize these types of loans for construction projects and property development loans.
How To Choose The Right Bridge Loan Lender?
Especially in California, bridge loan lenders are commonly known as private lenders with trusted partners and lending organizations. Better known as “hard-money” lenders, these California bridge loan lenders can provide short-term loans mainly protected by the previous real estate of the borrower. When going about choosing the right private lender to go with, it's important you take the following topics into account.
Do Your Research
To find the best bridge loan lender, you should spend some time doing research and comparing different rates from different lenders. Everyone knows how vast the real estate finance industry is, and that doesn’t change when it comes to how many lenders there are. It’s important to ask about rates, loan terms, down payments, requirements, and experience!
Don’t be afraid to ask deep questions about the lenders, it’s their job to make sure you’re as comfortable as possible when handling such a large amount of money.
Don’t be surprised if the lenders themselves ask you personal questions. They’re trying to get to know the person to who they’re going to be handing a lot of money. They’re going to want to know if you have any prior experience in real estate projects and if you have a detailed project plan beforehand.
Sort Out Your Finances Beforehand
A bridge loan in California is known to be a high-risk and high-reward loan option. It’s mainly used by professionals for real estate projects and construction. Because of this, it’s important that before you decide to choose a mortgage lender, you get your finances in order to make the process as simple as it possibly can be. (And that’s a stretch). Getting this step down correctly will save you a lot of time in the future process and makes finding the perfect bridge loan lender relatively simple.
You want to make sure that as a borrower, you cut down the number of precautionary steps you have to take when finding a bridge loan lender.
Compare and Contrast Loan Deals
Every California bridge loan lender that you come across during this process will provide you with a loan estimate. This document is the paperwork that a lender MUST provide you after you've given certain information, both about your finances and the property details. When given this document, you want to make the most viable and profitable decision right?
To do this, get those documents from at least 3 different lenders, (it’s a painstaking process but well worth it if you’re trying to make the most profitable decision). Compare the loan deals given by each lender, and don’t choose until you know that the one you’re looking at has your best interests at heart.
It’s important that not only do you choose the best loan deal, but also choose the lender who you trust the most. Getting a bridge loan in California is almost like you’re making an agreement with the lender to be your business partner until the real estate project is finished. The lender doesn’t just hand you the money and tells you good luck. The lender should be there every step of the way and provide referrals and insight on any financing solutions possible.
Any real estate investor will know that there are multiple stages of financing for development projects and such, you’ll want to have a business partner (bridge loan lender) every step of the way to make the process as simple as possible.
Direct money lenders in California come in a small bunch, there are not many lenders who don’t associate themselves with an institutional bank. Instead, these types of lenders dedicate themselves to specific lending organizations with strong relationships. Lenders like these tend to focus on the client's success and happiness over their own profitability because they rely on these relationships to succeed in the long run. Good news for borrowers looking to get quick funding on different real estate property projects.
All information presented in the article was given through informative interviews with Professional Mortgage Associates: PMA Partners