Our Brokers' clients are generally families that are in trouble due to a situation where they couldn't handle their house payment.  Almost always the situation was caused by a medical issue, job loss or some kind of emergency.  We look for the client that had a "hiccup", not the habitual credit abuser.  We are a Christian based company with a true concern for helping the borrower.  We have developed this program because most people cannot afford to pay on a new hard money 1st TD loan at 12%.  A lot of the time our client either has an existing prepayment penalty on their 1st TD or their 1st TD has a great rate and they shouldn't lose that loan.  Ours is a great solution that is in consideration of what is truly good for the client. 

This solution helps the client in the following ways:

  • Avoid paying a prepayment penalty on their existing 1st Trust Deed
  • Pay to clean up their credit
  • Pay off the debt on their credit
  • Because they avoid doing a hard money 1st Trust Deed, they avoid the resulting high payment and high prepayment penalty.    
  • No prepayment penalty
  • Catch them up on their existing 1st Trust Deed

Many homeowners who need a little extra money try to refinance their existing first home mortgage loan to get some cash out and/or consolidate debts.  There are several disadvantages to doing this:

  • The new loan will likely be at a higher interest rate than the existing loan, and they would be making this higher payment for many years.
  • If they re-pay any portion of your loan, their monthly payments will stay the same.
  • They may not qualify for cash out, depending on their FICO score.
  • Paying off their loan may result in steep prepayment penalties.

Why doing a 2nd Loan is better than a1st

The example below assumes a borrower has a $490,000 existing home loan and needs $60,000 for debts

New 1st Hard Money Refinance

Our 2nd TD Debt Refinance

  • Existing 1st loan of $490,000 at  6.5%

  • Existing Monthly Payment = $3,097.13

  • Existing 1st loan of $490,000 at 6.5%

  • Existing Monthly Payment = $3,097.13

  • Refinance the entire 1st loan with a new Hard Money 1st  $550,000 loan (Interest Only)

Total Monthly Payment
(@ 10 % Interest Only)      = $4826.64
Total Monthly Payment
(@12 % Interest Only)       = $5424.66

  • Leave existing 1st TD in place and do a new 2nd loan for $60,000 at 19.99%

Existing Monthly Payment             = $3,097.13
Monthly Payment for new 2nd TD    = $985.00
 
Total Monthly Payment                  = $4,082.13
$744.51  SAVINGS PER MONTH over a new  10% 1st TD
$1,342.53  SAVINGS PER MONTH over a new 12% 1st TD

Benefits and Disadvantages of Doing both Loans
   

Cash Out upon funding - $30,000 - $40,000

Cash Out upon funding - $50,000

NEW Prepayment Penalty - Stuck for 2 Years paying more

No Prepayment Penalty

Potentially have to pay off existing Prepayment Penalty on 1st TD just to get the loan

N/A

5-6 Points Total to do the transaction = $30,000 in fees if they DON'T have a Pre-Payment on their 1st TD

Average of $20,000 savings on loan fees.

 

Note:  Doing a new hard money 1st TD locks the client into a higher payment with a new Prepayment Penalty.  The client will get less cash.  With our hard money 2nd, the client can get their credit repaired, then refinance out of the 2nd.

 Download Complete Package on the Program (PDF file)