Ask Cornerstone: Do any private / hard money lenders deal with owner occupied mortgages?
I'm looking for a home equity loan for my primary residence. I want to do repairs to rent it out. I don't understand why private money lenders don't do owner occupied loans even if it's a small loan backed by plenty of equity. I need the loan soon and have plenty of documented income, but my credit score is too low (570) to refinance to a larger 1st loan.
The reason most private/hard money lenders do not loan on owner occupied residences is because they are considered “consumer loans”. A consumer loan falls under the new Dodd-Frank regulations that makes them cumbersome and doesn't allow for the higher interest rate that a private lender requires for this type of investment.
In many people's opinions, the Dodd Frank regulations, that were an effort to “protect” consumers, hurt consumers like your self in a good financial and equity position to qualify for a private money loan but can't due to regulations.