Lenders use this distinction because they want to know whether you’ll be living in a property, renting it out, or selling for speculation “spec” purposes. Renting out properties typically carries more risks to traditional lenders, which is why they seek this information.
For these borrowers, an owner-occupied hard money loan can be the answer. Hard money lenders make borrowing simple, based on common sense and the deal’s merits. Learn how borrowers can qualify for an owner-occupied loan from Applewood Funding Group, the leading Arizona private money lender
What is a Hard Money Loan?
Arizona Hard money loans
also help consolidate debt and improve credit, acquiring second, third, or fourth mortgages and cashing out on properties with equity to finance business deals and improvements.
Legal or divorce settlements
Dissolving a family trust
Settling estate inheritance issues
Resolving probate issues
Purchasing or refinancing properties with deferred maintenance or safety issues
Paying off a bankruptcy
They also are an ideal option for self-employed borrowers
who banks reject for not having solid credit or enough proof of income.
Owner-Occupied Hard Money Loans
An owner-occupied hard money loan offers borrowers many finance options. While traditional lenders can provide these types of loans, the requirements are often too strict and unforgiving. In addition, many borrowers have unique situations and need unique opportunities to give them the funding they seek.
Business Purpose vs. Consumer Purpose Hard Money Loans
Why are consumer-purpose hard money loans so rare in Arizona? This is a result of the 2008 recession and the Dodd-Frank Wall Street Reform Act
, signed in 2010. This act aimed to protect taxpayers and consumers from investment risks taken by banks.
After Dodd-Frank was signed, banks had to work hard to prove that borrowers understood loan risks, and they had to verify a borrower’s credit history, income, and job status.
The difference between consumer-purpose and business-purpose loans lies in how the borrower uses the loan.
Borrowers can use consumer-purpose loans for:
Purchasing a primary residence
Acquiring a second, third, or fourth mortgage
Operating as a bridge loan
Settling legal, estate, or probate issues
Business-purpose loans for:
New business start-up costs
Purchasing or improving a property
Purchasing new equipment
Buying out your partners
Qualifying for an Owner-Occupied Hard Money Loan
With Applewood, qualifying for an owner-occupied hard money loan
is simple. First, the team will want to see a short submission story and the property address. Beyond that, deals are examined on a case-by-case basis, so requested documentation can vary but remains uncomplicated.
Our team may look at a borrower’s assets and bank statements to make our decision. The process is common-sense driven, and we strive to make those fantastic deals possible for borrowers when banks have determined they are too complicated. Banks often run into seasoning issues, requiring a borrower to have six months to two years of income history. We can qualify you for a loan even if you just got a job yesterday.
Owner-Occupied Second Mortgage Hard Money Loans
Property types include:
Single-family or multi-family residence
Commercial, construction, industrial, or land
Hard Money Loans vs. Conventional Mortgages
While Arizona hard money loans are simple
, straightforward, and quick, conventional mortgages from banks have many more requirements. The strict documentation required for a chance at approval includes:
Low debt-to-income ratio
Proof of income and tax records
No bankruptcies or foreclosures
There used to be more options for borrowers in the form of non-qualified mortgages, but these dried up due to COVID-19’s effects on the marketplace. The ideal choice for unique borrowers is a private money loan.
Owner-Occupied Hard Money Loan Example
Hard money loans in Arizona
are ideal for many Arizona borrowers and situations. The speed, flexibility, and common-sense approach can make growing businesses and families much easier and less stressful.
An Arizona hard money loan
can be the best choice if a borrower is looking to purchase their first home but can’t go the traditional route. And if they need to get a second mortgage to gain access to precious equity, it can be a life-changing way to get their lives back on track by redeeming their credit and cracking down on old debts. In addition, business owners can have more freedom to expand and make processes more clean and efficient.
Plus, borrowers can acquire a loan by negotiating terms directly with the lender rather than adhering to strict credit and income requirements. Applewood also offers non-owner-occupied hard money loans, which are helpful for house flippers and real estate investors
Applewood Funding can provide:
Closing in as fast as seven days
Our team is dedicated to using an honest, straightforward approach to all deals and building long-term relationships with our brokers and borrowers, ensuring long-term success for all involved and a lifetime of great deals. Contact us today to speak with our team about your unique situation, ask questions, and get started.
We look forward to working with you.
Equal Housing Opportunity. This is not a Good Faith Estimate and this is not a Guarantee to lend and should not be considered as such. Costs, rates, estimates and terms can only be determined after completion of a full application. Actual payments will vary based on your individual situation and current rates. APR for loans vary from 7.99 – 29.5% and is based on Credit Score, Down Payment, LTV, Income. Mortgage rates could change daily. To get more accurate and personalized results, please call 623 582 4444 to talk to one of our licensed mortgage experts. Terms and conditions of all loan programs are subject to change without notice. Level 4 Funding LLC, 22601 N 19th Ave Suite 112, Phoenix AZ 85027, 623-582-4444 NMLS 1018071 AZMB 0923961 This e-mail is for the exclusive use of the intended recipients, and may contain privileged and confidential information. If you are not an intended recipient, please notify the sender, delete the e-mail from your computer and do not copy or disclose it to anyone else. Your receipt of this message is not intended to waive any applicable privilege. Neither this e-mail nor any attachment’s establish a client relationship, constitute an electronic signature or provide consent to contract electronically, unless expressly so stated by Dennis Dahlberg RI/CEO, Level 4 Funding LLC, in the body of this e-mail or an attachment. To the extent this message includes any tax or legal advice this message is not intended or written by the sender to be used, and cannot be used, for legal or tax purposes or advice.
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.