Hard Money Lenders Orange County: Fast Financing Solutions

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Are you looking to kickstart your next real estate project in Orange County with a hard money loan? Whether you’re eyeing a mid-century fixer-upper in Anaheim or a potential rental property in Newport Beach, hard money lenders in Orange County can provide the quick funding and flexibility you need. Hard money loans offer a flexible financing option outside of traditional banks, perfect for those who need quick cash, have limited savings, or face credit issues.

Even if you’re not a real estate investor but need to bridge the gap between buying and selling your home, we’ve got you covered with alternatives to tap into your home’s equity. This article will break down the basics of hard money lending in Orange County, helping you see if this approach fits your real estate goals or home-buying needs.

Start Making Offers Without Waiting to Sell Your Home

Through our Buy Before You Sell program, HomeLight can help you unlock a portion of your equity upfront to put toward your next home. You can then make a strong offer on your next home with no home sale contingency.

Editor’s note: This post is for educational purposes and is not intended to be construed as financial advice. HomeLight always encourages you to consult your own advisor.

What is a hard money lender?

A hard money lender is a private individual or company that provides short-term loans secured by real estate. Unlike traditional banks that prioritize your credit score and income, hard money lenders in Orange County focus on the value of the property used as collateral. They often work with house flippers and those buying rental properties, offering quick funds and flexible terms.

Hard money lenders determine loan amounts based on the after-repair value (ARV) — the estimated value of the property after renovations. Typically, they lend a percentage of the ARV to ensure their investment is secure. Interest rates for these loans range from 8% to 15% or more, with repayment periods usually between 6 and 24 months. Borrowers also incur costs like origination fees, closing costs, and points. If a borrower fails to repay, the lender can seize the property to recoup their investment.

How does a hard money loan work?

If you’re looking for a quick and flexible financing option for your real estate ventures in Orange County, a hard money loan might be the solution. Here’s a breakdown of how these loans generally work:

  • Short-term loan: These loans typically have a repayment period of 6–24 months, much shorter than the 15- or 30-year conventional mortgage terms.
  • Faster funding option: Hard money loans can be approved within days, offering a much quicker turnaround compared to the 30 to 50 days needed for traditional mortgage approvals.
  • Less focus on creditworthiness: Approval is less dependent on your credit score and income history and more on the value of the property.
  • More focus on property value: These loans are based on the loan-to-value ratio of the property being used as collateral.
  • Not traditional lenders: Hard money loans are typically provided by private investors or lending companies, not traditional banks.
  • Loan denial option: These loans are often used by individuals with poor credit who have been denied a mortgage but possess significant home equity.
  • Higher interest rates: Due to the higher risk involved, hard money loans carry higher interest rates compared to conventional mortgages.
  • Might require larger down payments: Borrowers might need to provide larger down payments, sometimes up to 20%–30% of the property’s value.
  • More flexibility: With fewer regulations, hard money lenders can set flexible criteria, including credit scores and debt-to-income ratios, and can help homeowners avoid foreclosure.
  • Potential for interest-only payments: Unlike traditional mortgages, some hard money loans initially allow for interest-only or deferred payments.

What are hard money loans used for?

Hard money loans serve various needs within the Orange County real estate market. They’re a go-to for investors and homeowners who need quick cash or don’t meet traditional lending criteria. Here’s how these loans are typically used:

Flipping a house: In Orange County, investors focused on flipping homes benefit from the fast funding hard money loans provide. These loans enable them to buy, renovate, and sell properties quickly, taking advantage of market opportunities.

Buying an investment rental property: Investors looking to buy rental properties often use hard money loans for quick access to funds. These loans enable fast purchases and necessary renovations, allowing landlords to start earning rental income sooner.

Purchasing commercial real estate: Hard money loans are ideal for commercial real estate deals due to their flexibility and speed. They help investors act quickly on valuable properties, often beating out competitors who rely on slower, traditional financing.

Borrowers who can’t qualify for traditional loans: Those with significant home equity but poor credit sometimes use hard money loans. These loans focus on the value of the property rather than the borrower’s credit score, making them accessible to more people.

Homeowners facing foreclosure: Hard money loans can be a lifeline for homeowners at risk of foreclosure. They provide the funds needed to refinance or buy time to sell the property, helping to avoid the negative impact of foreclosure on credit scores.

How much do hard money loans cost?

Hard money loans typically cost more than traditional loans due to their higher risk and convenience. Here are some of the common costs:

  • Interest rates: These can range from 8% to 15%, based on the lender’s risk assessment.
  • Origination fees: Lenders might charge 1% to 5% of the loan amount.
  • Closing costs: Additional fees like legal and appraisal fees are due at closing.
  • Points: Lenders may charge points, a percentage of the loan amount, upfront.

You can use online calculators to estimate your total costs.

Alternatives to working with hard money lenders

If you’re an Orange County homeowner looking to tap into your home’s equity, here are several alternatives to consider:

Take out a second mortgage: With substantial equity in your home, a home equity loan, or HELOC, can provide funds at lower interest rates compared to hard money loans.

Cash-out refinance: This option lets you refinance your existing mortgage, pulling out cash for new investments, often at a lower interest rate than hard money loans.

Borrow from family or friends: Personal loans from family or friends can offer flexible repayment terms and potentially lower or no interest, making it a more affordable option.

Use a government-backed loan program: Programs like those from the FHA, VA, or USDA assist in purchasing homes with lower down payments and reduced interest rates.

Peer-to-peer loan: Provided by individual investors through platforms like MeridianLink or Funding Circle, these loans function similarly to hard money loans but often have different terms.

Specialized loan programs: Look into specialized loans for fixer-uppers or refinancing investment properties if you already have a hard money loan and are looking to replace it.

Request a seller financing option: Sometimes, sellers may agree to finance the purchase themselves, resulting in lower closing costs and less stringent eligibility requirements.

How to buy before you sell

Sometimes, the perfect home pops up on the MLS when you least expect it. Perhaps it’s a turnkey townhouse in Tustin or a rare mid-century home in Costa Mesa. If you’re an Orange County homeowner looking to buy a new home before selling your current one, HomeLight has a solution that simplifies the process.

The Buy Before You Sell (BBYS) program allows you to use the equity in your current home to make a strong, non-contingent offer on a new property. If your home qualifies, you can get your equity unlock amount approved within 24 hours, with no cost or commitment required. This program lets you purchase your new home first and then sell your existing home vacant, avoiding the hassle of moving twice.

Here’s how HomeLight Buy Before You Sell works:

Although there’s a flat fee of 2.4% of your current home’s sale price, the potential savings could be significant. You might save on moving expenses, temporary housing, and even the purchase price of your new home. Plus, HomeLight’s BBYS fees are typically much lower than the interest rates on bridge loans, which currently range from 9.5% to 12%.

3 top hard money lenders in Orange County

​​Traditional lenders can be a solid choice for real estate financing, but they often lack speed and flexibility. If you need to act quickly on a real estate opportunity in Orange County, the following hard money lenders might be the way to go.

Hard Money Lenders California

Based in Newport Beach, Hard Money Lenders California offers a variety of hard money loan programs, including bridge loans, fix-and-flip loans, renovation loans, commercial loans, construction loans, and more. The company has been in business for more than 25 years, touts over $1 billion in funding, and falls within the top 1% of lenders in the country. They’ve funded deals ranging from $100,000 to $100 million, and can typically close hard money loans within a week to 10 days.

Lending clientele: Residential, commercial, and development investors, plus homeowners

Loan criteria: Up to 85% LTV; in certain scenarios, up to 90% LTV

Alliance Portfolio

Alliance Portfolio is located in Aliso Viejo and serves Orange County, Los Angeles, San Diego, and the Bay Area. Founded in 1996, the full-service, boutique, private money lender offers several different loan types for borrowers. They will consider single-family homes, non-owner-occupied residential properties, multi-family units, commercial properties, light industrial properties, mixed-use properties, and vacation rentals. Applicants can get approved within 24 hours, and loans can close in as little as five to 10 days.

Lending clientele: Residential and commercial real estate investors, developers, and homeowners

Loan criteria: Up to 70% LTV

Save Financial

Save Financial, based in Newport Beach, is a hard money lender whose loan officers have a combined 25 years of experience in mortgage lending. Their hard money loan programs include owner-occupied loans, investment property loans, fix-and-flip loans, and bridge loans. They serve all counties in California, including Orange.

Lending clientele: Residential and commercial real estate investors, and homeowners

Loan criteria: Depends on the loan program; up to 70% LTV for residential hard money loans

Investing in real estate?

Hire an investor-friendly real estate agent who can help you get access to off-market properties at a discount and assess potential rental income based on market trends. HomeLight can connect you with investment property specialists at no cost.

Should I partner with a hard money lender in Orange County?

Deciding whether a hard money loan is right for you in Orange County depends on your specific needs and real estate investment goals. Hard money loans are perfect for projects that need a quick turnaround or when traditional financing options are not viable. If you’re prepared to handle the higher costs and shorter repayment periods for the sake of fast and flexible funding, reaching out to a hard money lender in Orange County could be a smart move for your next investment.

For homeowners wanting to leverage their home’s equity, HomeLight’s Buy Before You Sell program might be a more suitable option. Instead of facing high interest rates, you’ll pay a modest flat fee and benefit from a stronger offer and a smoother move.

When making such a significant financial decision, consider your long-term strategy and consult with a financial advisor to ensure it aligns with your overall goals. If you’re looking for investor-friendly real estate agents in Orange County who can connect you with trusted hard money lenders, HomeLight can introduce you to top professionals in your area.

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