A San Diego business owner used owner occupied private money financing to acquire a new primary residence.
The challenge for this self-employed home buyer in San Diego County was that time was running out to close escrow. The buyer was smart, engaging both a local bank on a jumbo loan and First Capital Trust Deeds for owner-occupied private money financing in case the bank couldn’t come through or chose not to make the loan.
The fallback solution was a three-year owner-occupied private money loan for $700,000 at 8.00% interest-only. It’s just a stopgap solution until after the April 2015 tax season has passed and the borrower can go back to the local bank, or another bank, refinancing into a jumbo loan.
The quick financing worked out for both buyer and seller on this transaction. For the buyer/borrower, it wasn’t optimal like the bank loan would have been, but it got the job done with just a few days left to close the transaction and will probably only be in force for 8-12 months before it’s refinanced into a jumbo bank loan. The trust deed investor made what is expected to be a short-term loan (<12 months) to a very strong borrower against a beautiful home with hundreds of thousands of dollars in protective equity.
Owner Occupied Private Money Financing Terms:
- $700,000 Loan Amount
- 8.00% Interest-Only
- 36-Month Term
- No Prepayment Penalty