Owner Occupied Business Purpose Hard Money Loans
By G. David Lapin On June 23 2023
Using funds for business purposes from your owner occupied home.
Owner-occupied business purpose hard money loans are a type of financing that allows individuals or businesses to borrow money using real estate as collateral. These loans are specifically designed for borrowers who intend to use the funds for business purposes and occupy the property being used as collateral.
Here are some key points to understand about owner-occupied business purpose hard money loans:
Collateral: These loans are secured by the property being purchased or refinanced. The property is used as collateral to protect the lender in case of default.
Business Purpose: The loan proceeds must be used for business purposes, such as starting a business,expanding an existing business,purchase or rehabbing an investment property,refinancing existing business debt and liquity needs for your business. These loans are not intended for personal use or passive investment properties.
Hard Money Loans: Hard money loans typically come from private/trust deed investors or alternative lenders rather than traditional banks. They are called "hard money" because they are secured by a hard asset (in this case, real estate) and the loan approval is primarily based on the value of the collateral rather than the borrower's creditworthiness.
Owner-Occupied Requirement: To qualify for an owner-occupied business purpose hard money loan, the borrower typically needs to occupy a portion of the property as their primary place of business. This distinguishes these loans from investment property loans, where the borrower does not reside or conduct their business on the property.
Terms and Costs: Owner-occupied business purpose hard money loans often have shorter terms and higher interest rates compared to traditional bank loans. The loan-to-value (LTV) ratio may be lower as well, meaning borrowers may need to provide a larger down payment or have more equity in the property.
Risks and Benefits: These loans can be an option for borrowers who may not qualify for traditional financing due to credit issues or other reasons. However, the higher interest rates and shorter terms can increase the overall cost of borrowing. It's important for borrowers to carefully assess the risks and benefits and consider alternative financing options before proceeding with a hard money loan.
For more information on our Hard Money Loans or Trust Deed Investments, call our office at 714.838.1474 ext. 102 or visit our:www.hanovermc.com