First Capital Trust Deeds (FCTD) does not offer hard money second mortgages for personal debt consolidation, even to bring up credit scores in order to qualify for conventional financing. Debt consolidation loans are considered consumer purpose loans and FCTD’s focus is business purpose lending for real estate investors and business owners, not homeowners.
This blog post will cover what you need to know about debt consolidation, consumer purpose second mortgages, and where to find the financing you need.
Hard money lenders aren’t a good source for debt consolidation second mortgages for the following reasons:
I’ve written about it in blog posts, but hard money lenders rarely provide consumer purpose loans for personal (credit cards, home improvement, income taxes, etc.) or household use (primary residence or second home). Instead, they offer business purpose loans for real estate investors or business owners where loan proceeds go toward a bonafide business purpose, like purchasing equipment.
Over the years, I’ve received dozens of requests for $20,000 to $50,000 hard money second mortgage requests. We don’t do small second mortgages, especially consumer purpose second mortgages.
FCTD’s minimum loan amount for a business purpose loan is $150,000 — with caveats. Most other hard money lenders I know also have a $150,000 minimum loan amount requirement.
Borrowers asking for small loans often have limited hard money borrowing experience, which means lots of questions to be answered — and a very time consuming process. Most hard money lenders have limited time, so they set minimum loan amounts they’ll offer borrowers.
Below are the places I think you should look for a debt consolidation second mortgage. I covered these alternatives in another blog post.
Check with a smaller community bank that has 1-10 branches rather than megabanks like Bank of America, Chase, or Wells Fargo. Local banks may have requirements to lend within their area, which may work to your favor.
Credit unions also have local lending requirements. They’ll require membership, but the rewards often outweigh the cost of membership.
There are numerous online peer-to-peer lenders that offer personal loans, which can be used to consolidate revolving consumer debt. Prosper, Lending Club, Upstart, SoFi, Best Egg and others offer unsecured loans that can be easy to qualify for, with turnaround times in as few as 48 hours.
Not everyone wants to turn to friends and family for a loan — nor do family and friends necessarily want to be approached for a loan. But, in some cases, this is the best alternative to a hard money debt consolidation second mortgage.
I’ve worked with Marquee Funding Group in Calabasas, California, for over a decade. They're both mortgage brokers and hard money lenders. Marquee will do consumer purpose hard money second mortgages for debt consolidation, home improvement, or buying out a family member for properties (in California only.)
They’re one of the few hard money lenders that excels at consumer purpose second mortgages. I refer borrowers to them every month.
Conclusion
FCTD doesn’t offer consumer purpose hard money second mortgages for personal debt consolidation. It’s outside our area of expertise and focus, which is business purpose lending for real estate investors.
Alternatives include community banks, credit unions, online lenders, family, friends and even a competitor of ours — Marquee Funding Group — for properties in California. I recommend that you explore all these options for your debt consolidation second mortgage financing scenarios.