A Northern California homeowner used a free and clear property as collateral to buy a new house using an owner occupied private money blanket loan.
This was a pretty straight forward case where a debt averse homeowner wanted to buy a new primary residence using a combination of a large down payment, the free and clear equity in their existing home, and a short-term 11-month owner occupied private money blanket loan.
When FCTD does a regular 11-month owner occupied private money bridge loan, we’re limited to a maximum of 70% Loan-To-Value (LTV). However in this case, the borrower was selling a $330,000 home and buying the new home for $505,000 and actually needed 75% LTV of the new home price to complete the transaction. FCTD worked with the fund manager and underwriters to use the vacating property as additional collateral for the loan, which brought the Combined Loan-to-Value (CLTV) between the two properties down to 43% CLTV.
Since the borrower was debt averse, they liked that the idea that when they sold their vacating primary residence, the majority of the bridge loan would be paid off, leaving approximately a $25,000 balance remaining before the 11-month balloon payment came due.
This loan worked out really well for the borrower who was able to sell their vacating primary residence, which paid off nearly 90% of the unpaid balance (UPB) of the this blanket loan. For the trust deed investor, this loan was on the books at 9.99% for nearly 10 months, which was an excellent duration for a loan written for only 11 months. Overall, both parties were able to accomplish their goals.
Owner Occupied Private Money Blanket Loan Terms:
- $375,000 Loan Amount (43% LTV)
- 9.99% Interest-Only
- $3,121/Month Payment
- 11-Month Term
- No Prepayment Penalty