A buyer with a large down payment needed a small $150,000 owner occupied private money loan to complete the acquisition of this beautiful home in San Bernardino.
The owner occupied private money loan program is becoming a bigger portion of our loan origination business. Many home buyers still have a few lingering issues like prior short sales, foreclosures, less than two years self-employment, or long-time self-employed who don’t show enough income to qualify for a conventional or jumbo mortgage.
We sometimes think that we’ve seen it all and know what can and cannot be done in terms of private money owner occupied financing. Okay, we haven’t seen it all, but we hear a lot of unique situations that all tend to revolve around the four obstacles listed above. Those are the recurring themes that keep coming up over and over again.
In this case, the borrowers couldn’t obtain conventional financing. By early next year, after income their taxes were filed, they’ll be able to obtain a conventional mortgage.
Fortunately for them, they had a large down payment which made qualifying and obtaining an owner occupied private money loan pretty easy. There was very little risk to making this loan for the trust deed investor (lender) who loaned the money. And even though the loan carried a 9.50% note rate, the borrowers didn’t feel like it was too much of a financial burden to use the loan for 7-8 months until refinancing into a 15-year fixed rate loan in the mid 2.00% range or a 30-year fixed rate loan in the low 3.00% range.
Owner Occupied Private Money Loan Terms:
- $150,000 Loan Amount
- 9.50% Interest-Only
- $1,187/Month Payment
- 240-Month Term
- 6-Month Prepayment Penalty