April 12, 2023

Now that the California Dream for all is gone, I thought about this equity share and how many people fell in love with the idea. It was so popular that we ran out of money in 11 days! Do you think this option is viable for your clients as we advance? Do you think some of your buyers have relatives that would hook them up with a down payment and do an equity share? If you believe it is possible, continue to read on, as I cannot facilitate a deal like this, but I don’t need to know about it!

A buyer can set up a deal with a relative who can loan them a down payment or gift the down payment. Both transactions will be different, so I will walk you through them.

Buyer Lenny gets a loan from Auntie Greta for 20% of the $750,000.00 purchase price. We can’t have 100% financing, so buyer Lenny has to come up with 5% down. Auntie Greta loans 20% down, and Lenny has a 1st Mortgage of $562,500.00 and a second Mortgage with Auntie Greta for $150,000.00, and he puts down his own 5%! Auntie Greta can charge an interest-only payment to Lenny on the loan, and after the loan closes, they can agree to different terms like an equity share with or without payments!

Say Lenny has no money for the down, and Auntie Greta gifts Lenny 5% and carries a second for 15%, still giving Lenny $150,000.00, but $37,500.00 is a gift. After the close, they can agree to an equity share agreement.

Both are simple, and both make sense. Many relatives have money but want it back for their retirement. Buyers and giftors/loaners can write anything they want into an agreement and even record it! This loan was so popular because of all it had to offer, and NOBODY complained about the equity share. Approaching a relative with an investment opportunity vs. asking for a gift are two different things. Equity sharing is a better approach, especially if it is not your parents!

Rates are up slightly this week! It’s always day-to-day!

• 12-day escrows if your buyer is pre-approved - Conventional / FHA / Jumbo / Bridge
• 0 down California Dream for all Equity Share program 6.125% today (6.31APR)
• 3/2/1 Buydowns 2/1 Buydowns and 1/0 Buydowns are available at great start rates!
• Government Loans (FHA / VA) are in the low to mid to high 5’s.
• Conventional Loans up to $726,200.00 are in the high 5’s and low 6’s.
• High Balance Loans $726,201.00-$ 1,089,300.00 are in the low to mid 6’s
• Jumbo loans above $1,089,300 are in the low to mid 6’s
• 5/1, 7/1, 10/1 Arms are in the 5’s and 6’s.
• Bank statement loans - They are available with 10% down again! 7’s + depending on down and credit score.
• Stated income loans – 20% down with reserves! In the 8’s and 9’s!
• 0 down loans are in the high 5’s to low 6’s- 620 credit score min right now! Low 6’s, for the most part, up to $725,000.00.
• Private Money lenders - hard Money Loans – 35% down!
• No Ratio Loans 30% down
• Debt Service Coverage loans with as little as 25% down
• Bridge Loans - are typically 7.49% with limited fees – But they get you where you need to go!

Interest rates are subject to change without notice! Above are LA County Loan Limits.

I am around all week if you have any questions or if someone is interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 ext. 2222. Please text me at 661-714-6258 or email me at Mike@AugustaFinancial.com. Have a great day and a better tomorrow! Please call me when you have a client that needs to borrow!