Your Guide to How Owner-Occupied Hard Money Loans Work

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September 6, 2022

Your Guide to How Owner-Occupied Hard Money Loans Work

Owner occupancy hard money in Arizona means a borrower will use a property as their primary home.

 
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.
 
There also are Arizona owner-occupied business loans, where you use the loan to improve or expand your business. Traditional hard money lenders in Arizona offer both types of loans, but many borrowers needing an owner-occupied loan don’t qualify for conventional loans.
 
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?

 

Private investors, rather than banks, fund hard money loans. Typically, they offer borrowers short-term funds for time-sensitive projects such as real estate investments or house flipping. But hard money lenders such as AppleWood Funding take loans to a higher level. 
Bottom of Form
 
Applewood Funding is a full service mortgage banking firm specializing in owner-occupied private money loans. The goal is to offer Arizona borrowers a valuable alternative to institutional financing. Applewood Funding offers quick funds for short-term projects and long-term owner-occupied consumer loans ranging from 20 to 30 years. 
 
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. 
 
Need assistance solving legal or estate issues? Consider an owner-occupied hard money loan for:
o   Legal or divorce settlements
o   Dissolving a family trust
o   Settling estate inheritance issues
o   Resolving probate issues
o   Purchasing or refinancing properties with deferred maintenance or safety issues
o   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.
 
Applewood is one of the only Arizona hard money lenders offering borrowers owner-occupied consumer-purpose loans in addition to business-purpose loans. 
 
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.
 
Most Arizona hard money lenders stopped offering owner-occupied consumer loans due to the new regulations, even if they continued to provide business-purpose loans. But Applewood Funding recognized this need was still very much alive.
 
The difference between consumer-purpose and business-purpose loans lies in how the borrower uses the loan.
 
Borrowers can use consumer-purpose loans for:
o   Purchasing a primary residence
o   Refinancing their home
o   Remodeling their home
o   Acquiring a second, third, or fourth mortgage
o   Consolidating debt
o   Operating as a bridge loan
o   Settling legal, estate, or probate issues
 
Business-purpose loans for:
o   New business start-up costs
o   Purchasing or improving a property
o   Operating capital
o   Purchasing new equipment
o   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

Applewood Funding offers owner-occupied second mortgage hard money loans for business or consumer purposes. By using the equity in a borrower’s current home. Consumer purposes of paying off high-interest debt or for legal settlements. Business purpose can be used for business growth opportunities.
 
o   Property types include:
o   Single-family or multi-family residence
o   Commercial, construction, industrial, or land
o   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:
 
High credit score
o   Low debt-to-income ratio
o   Proof of income and tax records
o   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:
o   Same-day approvals
o   Closing in as fast as seven days
o   Common-sense underwriting
 
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.
Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
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

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.
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