Since the financial crisis in 2008, the U.S. regulators have tightened the regulations on home mortgages. Higher credit scores, more cash, and increasing credit worthiness are all things that have changed. If you are in a situation where one or all of these items will prevent you from getting a conventional home mortgage, then you may want to look at an owner-occupied hard money lender. These are loans that the owner of the property will be living in the property that the loan is being secured for.
If you are in a situation where you cannot be approved for a conventional mortgage, then an alternative may be the owner-occupied hard money loan. If properly underwritten and the loan is compliant with government regulations, this could be a great alternative. The hard money loan is also a great alternative for real estate agents or mortgage professionals whose clients may not be able to purchase a home going the conventional route.
Another type of hard money loan is the consumer bridge loan. This type of loan is short term in nature, with terms that start as low as three months. The purpose of the loan is focused on borrowers who cannot secure a conventional loan. Some of the reasons that a conventional loan is not an option is: the borrower has one existing home and is seeking to purchase a new home, downsizing, short-term problems the borrower faces such as foreclosure, bankruptcy, or insufficient amount of time on a new job, a short sale, not enough cash for a sufficient down payment, divorce or probate, avoiding the need to liquidate assets such as stocks, 401Ks, 1031 exchanges, and fallout from reverse mortgages. Conventional lenders will usually not make a conventional loan if any of these situations are present.
The terms for a bridge loan are: closes in 5-7 days, but could be longer, the term is eleven months maximum, typical interest rate is 9.9% and expect to pay points in the range of 2-3% plus admin and doc fees.
There are Arizona Hard Money Lenders that offer loans with longer terms. At Level 4 Funding, we often extend existing loans for current lenders and can help you find the right type of loan for your current real estate project.
An Arizona owner-occupied hard money loan is, as the name states, a hard money loan for a longer term on a private owner-occupied residence. These are less common. Most times, when a borrower seeks this route, it is because of credit issues that cannot be resolved in 12 months. A borrower will need to have his credit “seasoned” and it may take longer than a year. The borrower may be either self-employed or has a short time on the job. These types of loans could close in as little as 5-7 days, but expect longer, there is no prepayment penalty, and you will need to pay points in the range of 2-3% as well as admin fee and doc fees and debt ratios that must be below FNMA requirements. Other loans terms that a private lender could offer are 20/20 and maybe 15/15. Finally, do your homework, conduct due diligence and research the lender to make sure your loan is in compliance with BRE regulations. Here, at Level 4 Funding, we offer some of the best interest rates in the market. Call us for a no-obligation quote.
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis Dahlberg Broker/RI/CEO
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 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.