Investment Property Loans Archives

What Are Owner Occupied Hard Money Loans

By craig braddick on June 1, 2025 / Investment Property Loans, Owner Occupant Loans

Owner-occupied hard money loans are a special type of real estate loan secured by property that you live in (your primary residence), but they come from private or non-traditional lenders—not banks or government-backed institutions.

These loans are different from typical hard money loans (which are mostly for investment properties) because they must follow more consumer protection laws due to the residential, owner-occupied nature of the property.

🔍 What Is a Hard Money Loan?

A hard money loan is a short-term, asset-based loan where the property itself is the main collateral. These loans are often used when:

Credit is poor or unverifiable
You need fast financing
Traditional lenders won’t approve the deal

🏡 What Makes Owner-Occupied Hard Money Loans Different?

Because you’re living in the property, federal and state laws (like Dodd-Frank and Truth in Lending Act) require additional borrower protections:

Feature	Owner-Occupied Hard Money	Investment Hard Money
Regulated	Yes (strictly)	Loosely
Income Verification	Required	Often skipped
Ability to Repay Rules	Enforced	Rarely required
Loan Purpose	Personal residence	Investment/business use
Higher Legal Scrutiny	✅ Yes	❌ No

💡 When Are Owner-Occupied Hard Money Loans Used?

These loans are rare but can be helpful in situations like:

You’re self-employed or have irregular income.
You’re in foreclosure and need a bridge loan.
You need to buy and renovate a fixer-upper you plan to live in.
You’ve been denied by traditional lenders due to credit or other issues.

📋 Typical Loan Terms

Interest Rate: 8%–12%+
Term: 6 months to 5 years
LTV (Loan-to-Value): 60%–75%
Down Payment: Often 25%+
Closing Time: As fast as 5–10 days

⚠️ Risks and Considerations

High interest and fees.
Short repayment periods.
Foreclosure risk if you can’t refinance or repay on time.
Must comply with Ability-to-Repay (ATR) laws and may require income docs, tax returns, etc.

✅ Tips for Finding a Good Lender

Look for licensed hard money lenders who understand consumer loan compliance.
Ask about prepayment penalties and balloon payments.
Make sure you have a clear exit strategy (refinance, sell, etc.).
Work with a real estate attorney to review the loan.

🏠 What Is a Bridge Loan?

A bridge loan provides temporary financing that helps you:

Buy a new property while waiting to sell your existing one
Access equity in your current home before it’s sold
Cover gaps in funding for time-sensitive real estate deals

It’s often secured by your current home or the home you’re buying.

💡 Example Scenario

You want to buy a new house but haven’t sold your current one yet.

Your current home has $200,000 in equity.
You need $100,000 for the down payment on the new home.
A bridge loan gives you access to that equity now.
Once your old home sells, you pay off the bridge loan.

📋 Key Features of Bridge Loans

Feature	Description
Term	Usually 6–12 months
Loan Size	Often up to 80% of your home’s value
Interest Rate	Typically 8%–12% (higher than traditional mortgages)
Repayment	Can be interest-only or deferred until home sells
Collateral	Usually your current home

✅ Pros

Fast access to equity
Helps you avoid contingent offers
Lets you act quickly in competitive markets
May allow no monthly payments until sale closes

⚠️ Cons

Higher interest rates and fees
Short repayment window
Risk of owning two homes at once
Could require good credit and significant equity

🏡 Who Uses Bridge Loans?

Homebuyers moving before selling their old house
Real estate investors needing temporary capital
Sellers buying a new home without waiting for a sale to close

Alternatives to a Bridge Loan

Home equity line of credit (HELOC) – lower rates, but harder to get if the home is listed for sale
Home equity loan – similar, but installment-based
Personal loan – limited amount, not tied to home
Borrowing from retirement or investments – last resort

Loan-to-Value (LTV) is a ratio that compares the amount of a loan to the value of the property securing it. It’s a key number that lenders use to assess risk in real estate financing.

📊 Loan-to-Value (LTV) Formula

$Value)×100\text{LTV} = \left( \frac{\text{Loan Amount}}{\text{Appraised Property Value}} \right) \times 100$

✅ Example:

Home value: $400,000
Loan amount: $300,000

$LTV=(300,000400,000)×100=75%\text{LTV} = \left( \frac{300,000}{400,000} \right) \times 100 = 75\%$

This means you’re borrowing 75% of the home’s value and putting down 25%.

🏦 Why LTV Matters to Lenders

LTV %	Risk Level	Notes
80% or lower	Low risk	Qualifies for best rates
81–90%	Moderate risk	May require mortgage insurance
91–100%+	High risk	Often not approved without special programs (e.g., FHA, VA)

Higher LTV = More risk for the lender
Lower LTV = Better terms for the borrower

💰 Impact of LTV on You

Area	Higher LTV	Lower LTV
Down Payment	Smaller	Larger
Interest Rate	Higher	Lower
Loan Approval	Harder	Easier
Private Mortgage Insurance (PMI)	Usually required >80%	Not required ≤80%

🔁 Common LTV Limits by Loan Type

Loan Type	Max LTV
Conventional	80% (97% with PMI)
FHA	96.5%
VA	100%
USDA	100%
Hard Money	60–75%
Bridge Loans	Typically 65–80%

🛠️ How to Lower Your LTV

Make a bigger down payment
Buy a less expensive property
Wait until home prices rise
Pay down loan principal

Owner Occupant Investment Property Loans

If you live in the Phoenix Valley and would like to get started with growing your real estate portfolio Brad Loans can help! Our lending service makes it easy for investors to finance new properties as owner occupants. We can work with bad credit, lend faster, and understand the real estate investment industry with decades of local knowledge in investing, fix and flip, and much more. Read about our loan programs by clicking here.

Call Today To Start Your Owner Occupant Loan 602-999-9499

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Are Hard Money Loans Punitive?

By craig braddick on May 19, 2025 / Flipping Houses In Arizona, hard money loan approval, hard money loans, Investment Property Loans

Hard money loans are not inherently punitive, but they can feel that way if you’re not prepared for their strict terms and high costs.

Here’s a breakdown to clarify:

🔍 What Makes Hard Money Loans Seem Punitive?

High Interest Rates
- Typically 10%–15% (or more), vs. 6%–8% for conventional loans.
- Monthly payments can be steep, especially on larger loans.
Large Upfront Fees (Points)
- 2 to 5 points (2%–5% of the loan amount) are common.
- These are paid regardless of whether the project succeeds.
Short Terms
- Usually 6 to 12 months.
- Not paying back in time can lead to default, extensions (with more fees), or foreclosure.
Aggressive Foreclosure Policies
- Hard money lenders often act quickly if payments are missed.
- Since their focus is on the asset, they’re more willing to take it back.
No Consumer Protections
- These are business loans, so standard consumer lending laws often don’t apply.
- There’s no “cooling-off” period, and disclosures may be minimal.

🔧 But They’re Not Meant to Be Punitive

Hard money loans are tools, especially for:

Real estate investors needing fast funding.
House flippers with equity but poor credit.
Bridge loans while refinancing or selling.

They trade cost for speed and flexibility. If used strategically, they can be highly effective.

✅ When They Make Sense

Use Case	Why Hard Money Works
Fix-and-flip	Fast closings, rehab draws
Bridge loan	Quick capital before long-term financing
Property with bad title	Lenders may work around issues
Poor credit, strong deal	Focus is on asset, not borrower

⚠️ When They Can Backfire

If you overestimate ARV or rehab budget
If market shifts and you can’t sell/refi
If you miss payments and trigger default clauses
If you’re inexperienced and underestimate holding costs

🧠 Bottom Line

Hard money loans are expensive but not evil. They’re not meant for long-term use, and they work best for experienced investors who can handle risk and move fast. Used correctly, they can unlock opportunities; misused, they can cost you your property.

If you’re interested in getting involved with real estate investing and need the capital to purchase properties hard money is a great way to get started. Brad Loans has extensive experience in both real estate investing and hard money lending and is proud to offer Phoenix Valley real estate investors the financing they need. It is easy to get started applying for hard money loan and Brad Loans is able to work with clients with bad credit and no credit. We are your source for hard money when traditional banks say no. Read more about Brad Loan’s hard money loan programs or get started fill out our hard money loan application or give us a call to ask questions at 602-999-9499.

Hard Money Loan Rates 2025

By craig braddick on March 24, 2025 / hard money loans, Investment Property Loans

Hard money loan interest rates in 2025 vary based on factors such as the lender, borrower’s experience, and specifics of the deal. Here’s an overview:

Interest Rates: Typically range from 9.5% to 15%. For example, New Silver Lending offers rates between 9.5% and 11.25% , while Prime Plus Mortgages in Phoenix starts at 10% .
Origination Fees (Points): Usually between 1% and 3% of the loan amount. New Silver Lending charges 1.25% to 1.75% , and Sherman Bridge Lending’s fees start at 2%
Loan-to-Value (LTV) Ratios: Often up to 90% of the property’s purchase price, with some lenders offering up to 100% financing for construction or repairs.

These rates are influenced by the borrower’s creditworthiness, investment experience, property type, and regional market conditions. Given the dynamic nature of interest rates, it’s advisable to consult multiple lenders to secure the most favorable terms for your specific situation.

Whether a hard money loan is a good option depends on your specific situation and financial goals. Here’s a breakdown of when it makes sense and when you might want to consider alternatives.

✅ When a Hard Money Loan is a Good Choice

✔ You Need Quick Financing – Hard money loans are approved and funded much faster than traditional bank loans (sometimes in a few days).

✔ Your Credit Score is Low – These loans are asset-based, meaning lenders focus more on the property’s value than your credit history.

✔ You’re a Real Estate Investor – If you’re flipping a house or need short-term financing for an investment, a hard money loan can provide the capital to make a deal happen.

✔ You Can Handle High Interest Rates & Short Terms – If you have a solid exit strategy (e.g., selling the property or refinancing), a hard money loan’s higher interest rate (9.5%–15%) may be worth it for the quick access to capital.

✔ You Need Bridge Financing – If you’re waiting for traditional financing but need to secure a property immediately, a hard money loan can bridge the gap.

⚠ When a Hard Money Loan Might Not Be the Best Choice

❌ You Need Long-Term Financing – Hard money loans usually have short terms (6 months to 3 years). If you need financing for a long-term investment, a traditional mortgage may be better.

❌ You Can Qualify for a Conventional Loan – Bank loans typically offer much lower interest rates (6%–8% vs. 9.5%–15% for hard money). If you can qualify for a traditional mortgage, it’s usually the more cost-effective route.

❌ You Don’t Have a Clear Repayment Plan – Since hard money loans have high rates and short terms, failing to refinance or sell the property in time can lead to financial trouble or even foreclosure.

❌ You’re Buying a Primary Residence – Most hard money lenders focus on investment properties, not personal homes. If you’re buying a home to live in, a conventional or FHA loan is usually a better option.

🔍 Bottom Line

A hard money loan is a great tool for short-term real estate investment, fast financing, or situations where traditional banks won’t lend. However, for long-term property ownership, lower-cost financing, or if you have time to wait for approval, a traditional loan is usually better.

Investment Property Loans