FCTD Blog

Current updates on the real estate market, private money, hard money, and trust deed investing.

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    What Is the Ability to Repay Rule?

    In the early and mid-2000s, mortgage lenders were handing out loans without the notion that they would ever be successfully paid in full. This, along with other factors, created the mortgage crisis that followed. In response to the crisis, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. This act allowed the Consumer Financial Protection Bureau (CFPB) to implement new rules to protect consumers who are borrowing money to purchase a home. One of those rules was the Ability to Repay requirement for closed-end residential mortgage loans.

    Picture of Ted Spradlin Ted Spradlin Feb 8, 2019 12:00:56 AM

    What Is a Hard Money Loan?

    Hard money loans, also known as private money loans, are most commonly 6-24 month bridge loans used by real estate investors for fix and flip projects or the acquisition of investment properties. These loans are mostly issued by individual trust deed investors, family offices, or pooled investment funds operating as a lender. This article answers the question, “What is a hard money loan?” and in addition to answering that question, it provides the advantages and disadvantages real estate investors experience when utilizing hard money loans to finance properties.

    Picture of Ted Spradlin Ted Spradlin Jan 9, 2019 7:11:06 AM

    What is Dutch Interest for a Hard Money Construction Loan?

    Some private lenders use a method of interest accrual known as “Dutch interest” for a hard money construction loan which calculates payments based upon the entire loan amount rather than payments on partial advancements in a construction loan.

    First Capital Trust Deeds works with a few hard money lenders in California, Oregon, Washington, and Florida that use Dutch interest. Most construction focused loans originated by FCTD, however, feature “New York interest”, where interest accrues on construction reimbursement advances rather than on the entire loan.

    Picture of Ted Spradlin Ted Spradlin Jan 2, 2019 9:49:03 AM

    Home Equity Lines of Credit vs. Second Mortgages

    If you want to unlock the value from your home while you’re still living in it, there are two main options available to you. A home equity loan, commonly known as a second mortgage, allows you to extract value from your home as a lump sum payment, which is added to your primary mortgage debt. A home equity line of credit (HELOC) can be a useful alternative, with this option allowing you to draw money from your property as you need it rather than as a lump sum.

    Picture of Ted Spradlin Ted Spradlin Dec 5, 2018 12:59:03 AM

    Commercial Mortgage Loan Alternatives

    When you’re on the brink of starting a new business and you want to own a property rather than rent, you may need to take out a commercial mortgage. Regardless of where you’re at in the application process, the chances are you’re feeling a sense of frustration. Commercial mortgages are notoriously difficult to get. They come with a higher degree of risk, which means banks ratchet up their minimal qualifying criteria.

    Picture of Ted Spradlin Ted Spradlin Nov 28, 2018 12:39:09 AM

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