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Feb 17 2018
  • By wpengine

How long does it take to fund a Hard Money Loan in Los Angeles?

This is a pretty common question we hear. This article will help you understand how long it takes to fund a Los Angeles hard money loan / Los Angeles private money loan.

Using hard money, to fund and close a project is a great idea. Here’s an article to discuss the steps involved, and what you have to go through in terms of timelines. A lot happens behind the scenes in order to get a Los Angeles hard money loan closed. It’s more than just a borrower signing documents and agreeing to make payments.

Below is a list of the parties involved in the hard money loan and funding process:

Borrower, seller, hard money lender, real estate agent, title company, escrow company.

The borrower is the entity who has the authority to borrow. This is generally an individual acting on behalf of an entity like an LLC or corporation. They have to prepare a resolution granting authority to act on behalf of the corporation.

The seller is the individual, or entity, from which the borrower is purchasing real estate.

The hard money lender is the person giving you the loan. This can also be a hard money broker, who manages the application, processing, and underwriting, and coordinating your funding.

The real estate agent is the one whose representing the borrower, buyer, seller, for the purposes of sale negotiation, and executing the deal.

The title insurance company provides a report on the property, which is being offered as collateral for the hard money loan. The report is compiled, by looking at counter and public records for information regarding liens, judgements, easements, etc, against the property – as well as the buyer/seller.

The escrow company is a 3rd party which collects and disburses the funds. The company oversees the final signing of all deeds and loan documents, and once everything is dotted and the ink has dried, the escrow company then disburses funds as per the agreement.

What happens before the borrower actually signs the loan docs?

The closing process starts at the beginning of the hard money process. The private lender orders title and escrow service. The title company will begin to gather info about the borrower and seller, and conduct a search of county records for things like liens, judgements, etc. The company creates a title report, which is an offer of title insurance on the property.

The escrow company accepts the deposit, pursuant to the purchase agreement. The company reviews documents of all entities involved, and determines whose the authorized signer. It obtains payoffs of existing liens on the property, and obtains rent rolls, leases, contracts, deposits, and taxes, as needed. The company also handles the 1031 exchange process, and prepares settlement statements based on the instructions you provided, and the purchase contract.

The company also handles coordinating and overseeing the signing of the loan closing documents. Depending on the seller’s location + local laws, the seller might simultaneously close with the borrower, or try closing separately at a different time and place.

What happens after the borrower signs the loan documents

The hard money lender wires the loan proceeds to the escrow company. The escrow company records the deed, mortgages, with the county. The escrow company disburses all the funds. The title company issues title insurance policies.

While signing the private money lending closing documents might seem like a fast process – it definitely isn’t. Large amounts of work go into getting the loan fully completed. The loan is complete when the mortgage/trust deed is recorded, after which the funds are disbursed. The loan funding, and closing process, can vary based on state and county procedures. As a rule, most transactions will disberse funds in 3 days after loan documents are signed.

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