Owner Occupied Hard Money Loans

Private Money Lenders for Residential Owner Occupied

Wave Private Money is a San Diego, California-based residential hard money broker (private money broker) providing owner-occupied hard money loans for borrowers needing residential hard money loans for a primary residence. Residential hard money loans are also available for non-owner occupied residential investment property. With over 20 years as a residential hard money lender, Wave Private Money has the expertise, experience, and proper licensing to guide a borrower through the owner-occupied hard money loan process. Both consumer-purpose (hard money consumer loans) and non-consumer-purpose owner-occupied hard money loans are available. Contact Wave Private Money now for an owner-occupied residential hard money loan.

Owner-Occupied & Residential Hard Money Loans

Many circumstances result in a borrower being denied a residential mortgage by banks and credit unions, causing the borrower to turn to a residential hard money lender to obtain a hard money loan for their primary residence:

- The borrower currently has poor credit
- The borrower has a recent foreclosure, bankruptcy, short sale or loan modification
- The borrower has less than two years of employment history with their current employer
- The borrower is self-employed
- The borrower needs a bridge loan for a primary residence
- The borrower is a foreign-national

Conventional Lender is Unable to Perform During Escrow

In some instances, a borrower receives financing approval for a conventional residential mortgage, only to have the lender not be able to perform while in escrow. In a competitive real estate market, this may result in the borrower missing out on the property as the seller may go with a backup offer.

To avoid losing the property, the borrower should consider obtaining financing from a private money lender who can lend on residential owner-occupied property. Private money lenders provide a much faster approval and funding process, which will help prevent losing the subject property. Once escrow closes and the property is secured, the borrower can refinance out of the hard money mortgage and into a lower-cost long-term mortgage.

Hard Money Loans for Primary Residences  

Business Purpose vs. Consumer Purpose Hard Money Loans

Wave Private Money can provide hard money loans for primary residences for both consumer purposes (hard money consumer loans) and non-consumer purposes. Most hard money lenders will not consider hard money loans for a primary residence. This is primarily because an owner-occupied residential hard money loan:

- Requires additional documentation
- Requires additional regulatory licensing
- Is subject to extra regulations
- Has mandatory rescission periods, which increase the time to fund the loan
- Has additional risks the lender must assume compared to investment loans

Business Purpose Hard Money Loans

A few residential hard money lenders provide business-purpose owner-occupied hard money loans. These types of loans are feasible when:
- The borrower already owns their primary residence
- The borrower has a sufficient amount of equity in their primary residence
- The use of the loan proceeds will be used for some business purpose
     - Funding an existing or new business
     - Purchasing an investment property

Consumer Purpose Hard Money Loans

Very few hard money lenders provide consumer-purpose owner-occupied loans (consumer hard money loans). A loan would be considered for consumer purposes if the proceeds were used to purchase a primary residence. If a cash-out refinance loan is taken out on an existing principal residence for personal reasons such as remodeling a home, purchasing personal items, paying down credit cards, or other debts, the loan would be considered a hard money consumer loan. Regulators define a consumer-purpose loan as one in which the proceeds are used for personal, family, or household use.

Qualifying for Owner Occupied Hard Money Loans

Residential hard money loans on owner-occupied homes for consumer purposes are subject to federal regulations, including Dodd-Frank. This requires the lender to verify the borrower’s income and debts. Income verification is usually accomplished by providing the lender with pay stubs, W2s, or tax returns. The borrower must also keep their debt to income (DTI) under a specific ratio. The borrower’s existing debts, including other mortgages, car payments, credit card payments, and other debts, will be considered in the ratio and the new proposed mortgage obligations (mortgage payment, taxes, and insurance).

Residential Hard Money Lenders  

Residential hard money lenders (for investment or owner-occupied properties) provide loans intended for short-term use only, generally a maximum of 3-4 years. Especially for an owner-occupied borrower, residential hard money lenders require that the borrower has a reasonable plan to obtain long-term financing.

This usually involves repairing credit to qualify for a conventional loan or postponing applying for a traditional loan until the mandatory waiting period after a significant derogatory credit event such as bankruptcy, short sale, foreclosure, or loan modification has passed. The Fannie Mae compulsory minimum waiting period after a pre-foreclosure, bankruptcy, or short sale used to be four years. These events' minimum mandatory waiting period has recently been shortened to 2 years.

Owner Occupied Hard Money Loans for 2nds

If a borrower currently has a conventional bank loan (1st loan) on their property and has enough equity, they may be able to take out a 2nd loan against their home. Homeowners often choose to take out a hard money 2nd against their property when they can’t qualify for a Home Equity Line of Credit (HELOC) or a Home Equity Loan (HEL) but still need to borrow against their property’s equity.

The interest rate on a hard money loan is higher than on a HELOC. Still, a consumer hard money loan would be considered a financially wise decision if the loan proceeds are used to pay off credit cards or other high-interest debt. For more information on 2nds, please visit our Hard Money 2nd Mortgages page.  

Private Money Lenders for Residential Owner Occupied Property

Wave Private Money is a private money broker for residential owner-occupied property in the United States. The borrower must have a substantial income, which can be verified with tax returns, W2s, or pay stubs. The borrower’s debt-to-income ratio must remain reasonable with the new proposed monthly loan payment to meet the current federal regulations.

The borrower must also have a down payment of at least 25-30%. A larger down payment will increase the likelihood of having the loan approved. Current credit scores must be considered for private money loans for a residential owner-occupied property. The credit scores must be at a level capable of being repaired and increased to the point that will allow the borrower to refinance into a conventional long-term loan within 1-3 years. Contact Wave Private Money Now to inquire about an owner-occupied loan.