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How Long Does it Take to Close a Hard Money Loan in California?

Loan Contract Being Signed Stamped and Approved

If you’ve ever closed a traditional loan, you know how long it can take. However, expect a hard money loan to take even longer and to have a lot more involved in the closing process.  You can expect your hard money lender to help you through this process and give you a checklist of required documents and items required to close the hard money loan.

Hard money loans have a lot of people involved in closing a hard money loan and we will take a closer look at each one and the job they need to do.

1. The Borrower

The borrower is either an individual or entity with the authority to convey property. If you are acting as an LLC or a corporation, you will have to prepare a resolution that grants you the authority to act on behalf of the LLC or corporation.  You will also have to gather all the documents and items required by the lender.

2.  The Seller

The seller is either the entity or individual from whom you are buying the property.

3. The Lender

The individual or entity who oversees the borrower’s loan application and provides you with a source of hard money investor funds.

4.  The Real Estate Agent

Licensed real estate agents who represent the buyer, lender, or seller and/or attorney(s) representing same parties involved.

5. The Title Insurance Company

The title insurance company has the job of providing a preliminary title report on the property. which is offered as collateral for the hard money lenders.

6. Escrow Company

The escrow company, which is a neutral third party, collects and distributes appropriate funds and also supervises the signing of all deeds and documents.

Where Does the Closing Process Start with a Hard Money Loan

Before you sign any documents, real estate agents will order title and escrow services. The title company will gather information, do a search of the property looking for any liens or judgments against the property, seller, or buyer, and create a preliminary title report.

The escrow company will accept deposits, review documents gathered, obtain payoffs of existing liens on property if applicable, obtain rent rolls, leases, service contracts, security deposits, property tax information for proration calculations, and coordinate 1031 Exchange process (if applicable). They will also prepare statements and oversee the signing of all documents at closing.

Once you sign all the documents, the hard money lender will wire the loan proceeds to the escrow/settlement services company who then records the deed and mortgages with the county and disburses the funds to all appropriate parties. The title company then issues the title insurance policy.

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