Simple Guide to How Owner-Occupied Hard Money Loans Work
6 minute read
April 13, 2021


Owner occupancy simply means a borrower will use a property as their primary home. Lenders use this distinction because they want to know whether you’ll be living in a property, renting it out, or selling for speculation “spec” purposes. Renting out properties typically carries more risks to traditional lenders, which is why they seek this information.

There also are owner-occupied business loans, where you use the loan to improve or expand your business. Both types of loans are offered by traditional lenders in California, but many borrowers needing an owner-occupied loan don’t qualify for conventional loans.

For these borrowers, an owner-occupied hard money loan can be the answer. Hard money lenders make borrowing simple, based on common sense and the merits of the deal. Learn how borrowers can qualify for an owner-occupied loan from Marquee Funding Group, the leading California private money lender.

What is a Hard Money Loan?

Hard money loans are funded by private investors rather than banks. Typically, they offer borrowers short-term funds for time-sensitive projects such as real estate investments or house flipping. But hard money lenders such as Marquee Funding Group take loans to a higher level. 

What’s your loan scenario?

Marquee Funding Group is a full-service mortgage banking firm specializing in private money loans. The goal is to offer California borrowers a valuable alternative to institutional financing. This means offering those quick funds for short-term projects, but also long-term consumer loans ranging from 20 to 30 years. 

Hard money loans also are useful for consolidating debt and improving credit, acquiring second, third, or fourth mortgages, and cashing out on properties with equity to finance business deals and improvements. 

Need assistance solving legal or estate issues? Consider a hard money loan for:

  • Legal or divorce settlements
  • Dissolving a family trust
  • Settling estate inheritance issues
  • Resolving probate issues
  • Purchasing or refinancing properties with deferred maintenance or safety issues
  • Paying off a bankruptcy

They also are an ideal option for self-employed borrowers who were rejected by banks for not having solid credit or enough proof of income.

Marquee is one of the only California hard money lenders offering borrowers owner-occupied consumer-purpose loans in addition to business-purpose loans. 

Owner-Occupied Hard Money Loans

An owner-occupied hard money loan offers borrowers many finance options. While traditional lenders can provide these types of loans, the requirements are often too strict and unforgiving. Many borrowers have unique situations and need unique opportunities to give them the funding they seek.

Business Purpose vs Consumer Purpose Hard Money Loans

Why are consumer-purpose hard money loans so rare in California? This is a result of the 2008 recession and the Dodd-Frank Wall Street Reform Act, signed in 2010. The purpose of this act was to protect taxpayers and consumers from investment risks taken by banks. 

After Dodd-Frank was signed, banks had to work hard to prove that borrowers understood loan risks, and they had to verify a borrower’s credit history, income, and job status.

Most hard money lenders stopped offering owner-occupied consumer loans due to the new regulations, even if they continued to offer business-purpose loans. But Marquee Funding Group recognized this need was still very much alive. 

The difference between consumer-purpose and business-purpose loans lies in how the borrower uses the loan. Borrowers can use consumer-purpose loans for:

  • Purchasing a primary residence
  • Refinancing their home
  • Remodeling their home
  • Acquiring a second, third, or fourth mortgage
  • Consolidating debt
  • Using as a bridge loan
  • Settling legal, estate, or probate issues

Business-purpose loans can be used for:

  • New business start-up costs
  • Purchasing or improving a property
  • Operating capital
  • Purchasing new equipment
  • Buying out partners

Qualifying for an Owner-Occupied Hard Money Loan

With Marquee Funding Group, qualifying for an owner-occupied hard money loan is simple. The team will want to see a short submission story and the property address. Beyond that, deals are examined on a case-by-case basis, so requested documentation can vary but remains uncomplicated.

Our team may look at a borrower’s assets and bank statements to make our decision. The process is common-sense driven, and we strive to make those unique deals possible for borrowers when banks have determined they are too complicated. Banks often run into seasoning issues, where they require a borrower to have six months to two years of income history. We can qualify you for a loan even if you just got a job yesterday.

Owner-Occupied Second Mortgage Hard Money Loans

Marquee Funding Group offers owner-occupied second mortgage hard money loans for business or consumer purposes. This is done by using the equity in a borrower’s current home. Consumer-purpose can be used to pay off high-interest debt or for legal settlements, and business-purpose can be used for business growth opportunities.

Property types include:

  • Single-family or multi-family residence
  • Commercial, construction, industrial, or land

Hard Money Loans vs Conventional Mortgages

While hard money loans are simple, straightforward, and quick, conventional mortgages from banks have many more requirements. The strict documentation required for a chance at approval includes:

  • High credit score
  • Low debt-to-income ratio
  • Proof of income and tax records
  • No bankruptcies or foreclosures

There used to be more options for borrowers in the form of non-qualified mortgages, but these dried up as a result of COVID-19’s effects on the marketplace. The ideal option for unique borrowers is a private money loan.

Owner-Occupied Hard Money Loan Example

Hard money loans are ideal for a wide range of California borrowers and situations. The speed, flexibility, and common-sense approach can make growing businesses and growing families much easier and less stressful.

If a borrower is looking to purchase their first home but can’t go the traditional route, a hard money loan can be the best choice. And if they need to get a second mortgage to gain access to precious equity, it can be a life-changing way to get their lives back on track by redeeming their credit and cracking down on old debts. Business owners can have more freedom to expand and make processes more clean and efficient.

Plus, borrowers can acquire a loan by negotiating terms directly with the lender rather than adhering to strict credit and income requirements. Marquee also offers non-owner-occupied hard money loans, which are useful to house flippers and real estate investors.

Marquee Funding Group can provide:

  • Same-day approvals
  • Closing in as fast as seven days
  • Common-sense underwriting

Our team is dedicated to using an honest, straightforward approach to all deals, and building long-term relationships with our brokers and borrowers. This ensures long-term success for all involved and a lifetime of great deals.Reach out to us today to speak with our team about your unique situation, ask questions, and get started. We look forward to working with you.

Photo by DESIGNECOLOGIST on Unsplash

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