True owner occupied Hard Money Loans in Texas are relatively unheard of in the industry. If you’re looking for one of your own, it’s important to become familiar with some of the drawbacks before you commit.
1. You, personally, must live on the property. Many people seek out owner occupied Hard Money Loans in Texas in the hopes of getting a better deal on financing, simply because most “owner occupied” lending options do have better terms. The logic behind this is simple: people will fight tooth and nail to keep their home. There’s less risk for a lender, so the lender will usually offer more favorable terms. The problem is, the borrower is the one who has to live in the home; not a family member and not a renter. Furthermore, it has to be the borrower’s primary residence.
2. Your income must be scrutinized. The Truth in Lending Act changed things in this respect. Because the government now sees the property as your primary residence, it sticks its hands into it too. The aim is to protect you to ensure you don’t wind up borrowing what you can’t repay, so the requirement then becomes that a third party has to look into you and your income.
3. Property taxes and hazard insurance have to be impounded if it qualifies as a “high-cost loan.” That means your lender has to collect extra payments from you for at least the first year you borrow. Furthermore, it’s up to you to be mindful and cancel it when it’s no longer required. Your lender isn’t allowed to do it for you.
4. You’ll get funded slower. Whereas a traditional private loan can close in a matter of days, you’ll need to add weeks or a month or more to this timeline if you’re borrowing as a primary residence. This, too, comes down to the added government regulations.
You Can Avoid Excess Regulations with Commercial Lending
While the above impacts you, directly, there are further regulations which cause headaches for the lenders too, which is why most will not provide owner occupied Hard Money Loans in Texas Instead, commercial or non-owner options are offered. With these, you are not expected the home. The requirements to qualify are different too. Instead of you being scrutinized, it’s mostly the property that’s of concern. Naturally, that’s a slam-dunk when it comes to things like fix-and-flips or fix-and-holds, but it can be extended to other circumstances. For example, if you’re adding a home office to your own property, technically the funds are for a business use. The key is that the funds cannot be used for you, your family, or your household.
Seek advice from an experienced broker to find the solution that’s right for you.
Chances are, you will not find owner occupied Hard Money Loans in Texas because of the red tape involved, but you probably wouldn’t want to anyway because it causes headaches for you too. A broker can walk you through funding options that are ideal for your particular situation, so you can get funded quickly and move on with your project.
Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
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