A portion of our business at First Capital Trust Deeds comes from home buyers who need to use owner occupied...
Hard Money and Private Money Owner-Occupied Loans
At one stage or another, there will come a point in your life where you need to access cash quickly. As the name suggests, an owner-occupied loan is a loan which you will take out and secure against the property you live in. While some people use these loans for meeting personal expenses, others will use them to fund investment projects. Such projects usually take place in the real estate industry. If you’re trying to secure a private money owner-occupied loan, you may find that doing so with a view to expanding your current property portfolio works to your advantage.
What is an owner-occupied loan?
The most popular definition of an owner-occupied loan is a loan that you secure using the property that you’re living in. However, that doesn’t mean you can’t access one using another property. If another house is your primary or part-time abode, you can use it to secure an owner-occupied loan.
There is one caveat, though. When you choose a property to secure your loan, it needs to be the place you classify as your main residence. So, if you own several properties, the one you use to secure your loan is the one that you return to as your main point of residence.
Why would you need to take out a private money owner-occupied loan?
Like many forms of finance, the traditional route to taking out an owner-occupied loan comes with several hurdles. Alongside needing a high credit score, securing the loan subjects you to the work of those who sift through your documents alongside the documents of other individuals trying to acquire the same type of finance.
In contrast, when you aim for a private money owner-occupied loan you will speed up the process in a couple of ways. First, unlike using a traditional financial institution, opting for a hard money owner-occupied loan doesn’t require a high credit score, though a good score is preferred. It’s worth noting that your credit score still matters, as well as evidence of your earnings and assets, but the barriers aren’t as rigid. Additionally, working with a private lender still delivers the same degree of security, with a quicker delivery.
Alongside speed of closing, you may want to choose a private money owner-occupied loan as a type of ‘bridge loan’ to secure another property and build your investment portfolio. If you’re eyeballing an ideal fix and flip opportunity, this type of loan will give you an edge against your competitors. Owner-occupied loans are an option whether you need long-term financing or a 12-month bridge loan to secure a project. If you don’t qualify for an FHA, Fannie Mae, or Freddy Mac loan, this avenue could work in your favor.
What’s the best way to secure a private money owner-occupied loan?
Private money owner-occupied loans come from prospective investors rather than large financial institutions, which means they convey plenty of benefits in terms of flexibility. As you may have noticed, this means they come from smaller and less obvious pools of investors. Rest assured, these loans are underwritten legally and in accordance with state-specific and federal Ability To Repay underwriting standards. They usually come with slightly higher interest rates, but they can be easier to access in exchange.
You can try to reach out for a private money owner-occupied loan yourself, but to increase your chances of success when trying to access a private money owner occupied loan, you should approach a broker. Brokers have the financial acumen you need to figure out which loan will best suit your requirements. In addition, they have a network of lenders who can fund your loan. Last but not least, building a relationship with a broker gives you a golden opportunity to allow a professional to understand your financial needs. With your interests in mind, they’ll help you secure a private money owner-occupied loan at rates and terms that work for you. First Capital Trust Deeds will help you explore your financial options.
Is it possible to obtain 90% owner occupied hard money financing for a primary residence in California?