As home prices have increased during the past few years, the market for private money second and third mortgages has opened up as more trust deed investors are willing to make loans to strong borrowers against excellent properties as collateral.
Second and third mortgage borrowers are usually self-employed and have significant equity in their home, which can either be owner occupied or an investment property. Self-employed borrowers often use the loan as a business purpose loan for investment in their existing company or for new real estate investments.
For most borrowers, obtaining a Home Equity Line of Credit (HELOC) from a local bank or credit union is either not an option due to their income tax structure (self-employed with large deductions), or not worth the 2-3 months application process that may only have a 50/50 chance of success.
Usually, our clients have already gone to a bank or two and don’t have the time, energy, or patience to go down that road again. They’re willing to pay extra for speed of execution because they usually have another real estate or business opportunity contingent on obtaining the funds from a private second or third mortgage against one of their existing properties.
Private Money Second & Third Mortgages Program Overview:
- Owner occupied and non-owner occupied properties.
- Primarily used for “Business Purposes”.
- Must show ability to repay the loan in the form of pay stubs, business or personal bank statements, or tax returns.
- Clear Exit Strategy required.
- 5 to 15 business day closings.
- Interest rates range from 9.75% to 12.50%.
- Interest-Only payments allowed.
- 12-month to 240-month terms.
- 65% Combined Loan To Value (CLTV) Maximum.
- Ratio of 1st Mtg : 2nd Mtg — 3:1 to 6:1.
- Vesting in the name of individual, Trust, Corporation, LLC, Self-Directed IRA or 401K, or Foreign National.