There are many reasons why a borrower would consider owner occupied hard money loans. Consider these motives when making your next decision on where to obtain financing for an owner-occupied property.
You apply for a conventional residential mortgage from your local bank or credit union only to be turned down. Don’t give up on your dream. Your other option is a residential hard money lender for your primary residence. This can be a viable solution in the following scenarios:
· Your credit is classified as poor
· Your history shows a recent loan modification, short sale, bankruptcy or foreclosure
· You currently joined your employer and have less than 2 years of provable employment
· You have your own business and are classified as self-employed
· You are seeking a bridge loan for short term purposes
You locate the perfect residence and receive a conventional mortgage only to find out your lending bank or credit union is unable to perform while in escrow. Now is a good time to consider owner occupied hard money loans. The approval and funding process of a residential hard money lender is much short that a conventional bank or credit union which will keep you from losing the investment property. After the house closes, you always have the option to refinance with a conventional loan. Since Dodd-Frank, many lenders will not even consider residential owner occupied hard money loans because:
· Additional documentation is required
· The hard money lender requires additional licenses
· Time to fund the loan increase due to mandatory recession period
· Compared to investment loans, the residential hard money loan has additional risks
A very small amount of Hard Money Lenders will provide owner occupied business purpose loans, however the borrower only benefits if:
· They own the primary residence
· The primary residence that the borrower owns has a sufficient amount of equity
· The funds the borrower receives will be used for a business purpose
Hard Money Loans for Consumer Purposes
Lenders are few and far between when a borrow wants to obtain owner occupied hard money loans for a property. If you plan on living in the home, this will be considered a primary residence purchase. If you are seeking to cash-out for your equity, this also classifies you as a primary residence loan. If the funds of the loans are to be used for family, personal, or household use, then regulators will classify the loan as a Primary Residence loan
Subject to Federal regulations are residential hard money loans due to Dodd-Frank which requires a lender to verify both the borrower’s expenses and income. To verify income a borrower can submit W2’s, pay check stubs, or tax returns. A borrower will be required to keep their debt-to-income within the required ratios.
A residential hard money loan is intended for a short period of time, usually 3 to 5 years.
Before closing the loan, a borrower will be required to submit a plan to obtain long-term financing, or a different exit strategy, depending on the situation. At Level 4 Funding, we can help you come up with the best solutions to your present funding needs. Give us a call to discuss your unique requirements. The world of real estate investment is creating millionaires every day—don’t delay on taking those first steps into a very lucrative business.
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.