Martha Molina Rodriguez, Personal Banker | SouthStar Bank Georgetown
Martha Molina Rodriguez joins the SouthStar Bank Georgetown team as a Personal Banker. Martha brings two years of banking experience along with her strong communication skills and passion for helping others to the team. She is excited to contribute her goal-oriented mindset and bubbly personality to her position to help create a welcoming environment for clients.
Outside of work, Martha can be found staying active and working on her personal growth. She enjoys going to the gym to maintain her physical and mental health. She is also an avid traveler who loves to experience new cultures and environments to broaden her perspective and aid in her personal growth. Hawaii is among her favorite destinations. Martha takes great pride in balancing her studies, raising her daughter, and staying dedicated to her personal goals.
Did you realize that a Self-Directed IRA can essentially serve as a lending institution? Promissory notes are a convenient way to loan money from retirement accounts to approved people and businesses while also earning interest on the loans. Many of our Self-Directed IRA holders choose to capitalize in alternative investments by becoming private lenders.
How the process of lending money works
It’s crucial to realize that IRS regulations apply because you’re making a loan through your Self-Directed IRA. You can’t lend to particular groups of persons or organizations. That list is quite short. You, your spouse, your parents, grandparents, children, grandkids, and their spouses, as well as any entity in which they own a majority stake are all considered to be disqualified people. There are still many persons and organizations that need loans.
A secured or unsecured promissory note may be issued by your IRA. You can also create a mortgage or trust deed in conjunction with a secured real estate note. The borrower will sign the promissory note and any other relevant loan documents after you draft it.
Always keep in mind that your IRA—not you, the IRA holder—is the lender. This implies that all income is reinvested in the IRA. All IRA loan documentation must be signed in the IRA’s name, not your own.
Here are some of the options for lending money with your Self-Directed IRA:
Equipment financing
Non-performing notes
Automobile loans
Bridging loans to companies that seek debt finance
Debt-financed loans
Microloans for small businesses
Residential and commercial mortgages
Equity participation loans
Personal loans
Advantages of using your Self-Directed IRA to lend money
1. You decide the rules. You can predetermine the terms of the loan, which is one of the key benefits of lending. You choose who or what firm you lend money to, as well as the loan amount. Additionally, you have control over the loan’s term, interest rate, and quantity and frequency of payments. You can decide whether the loan is secured or unsecured. Real estate is frequently used as collateral to secure loans, but secured notes also allow for the use of other assets.
2. Possibility of outstanding returns and maximal future earnings. You can gradually grow your retirement funds by making loans. By defining the conditions for principal and interest, you are generating a pre-determined return on your investment. Many people find that this results in a reliable stream of revenue returning to their self-directed IRA. Additionally, if the loan is backed by property or other assets, you are effectively investing in both the borrower and the security because you will have access to the asset in the event that the borrower fails on the loan.
3. Assist those who might not otherwise be eligible for loans. Lending money through your Self-Directed IRA could be a way to assist a person or company that has previously had trouble securing a loan. There are many creditworthy individuals or organizations out there that may be unable to obtain funding from a bank for a number of different reasons. However, it is crucial that you conduct your own research on any potential borrowers.
4. Make sure you take all necessary precautions. Many people who are interested in making loans find the process of discovering prospective borrowers enjoyable, including conducting their own research on potential borrowers. Here are some things to think about and important inquiries to make:
Who is the organization or group seeking a loan?
How secure is it? If it’s a company, does it have a track record?
Is it possible to see any financial documents before making a loan?
What occurs if there is a default?
Promissory notes and mortgages are used to secure loans when real estate is involved. If a default does occur, you would be allowed to perform a self-directed IRA foreclosure and take possession of the property.
These are but a few possible inquiries. Always use caution!
5. Tax benefits. Self-Directed IRA lending also allows you to make loans while maintaining all tax advantages related to IRA funds. Until you begin receiving distributions from your Self-Directed IRA, if it is a regular IRA, or tax-free, if it is a ROTH IRA, any earnings from this form of investment are tax-deferred. You don’t have to start taking withdrawals from your traditional retirement plan until you are 72. There are no distribution requirements if you hold a Self-Directed Roth IRA.
Ready to get started? Talk to us. We’re excited to help you secure the lot of your dreams.
Land loans are used to purchase land without a house on it.
In Part II of our series, we’ll further expand on the fundamentals of land loans:
Pros and cons of land loans
You made your land purchase — now what?
Pros and cons of land loans
Pros
You can build your dream home from the ground up. Purchasing land gives you the opportunity to start from zero and build a brand-new home that is precisely as you want it.
Develop at your own pace. If you pick a raw land loan, you can postpone building on the property until you are ready to move forward. Our loan terms for lot loans are 3 to 12 years, giving you plenty of time to obtain house plans and to finalize the plans and budget with the builder.
At that point, you can secure a construction loan.
Options with a single closure simplify construction. Construction loans have the benefit of financing your land purchase and the cost of new construction, transforming into a conventional mortgage when you’re ready to move in. This is useful if you’re ready to start building. Since you’ll just close once, the procedure will be simpler.
Cons
It might be harder to market raw land. Purchasing land can carry greater risk than purchasing a home, particularly if the economy isn’t doing well.
Land does not increase in value in the same manner as renovated property. Land is harder to sell than upgraded property when economies go “soft.”
Land may not be buildable. If you intend to construct a home in the future, especially if you’re purchasing unimproved land, you must confirm that the property can support a home. Do your due diligence! You’ll want to confirm road access, utility hookups, zoning requirements, and more.
You’ll face tougher qualifying criteria. A land loan can be more difficult to obtain than a conventional mortgage. Historically, borrowers looking to qualify for a land loan have needed to provide evidence of improved credit and make a larger down payment.
You made your land purchase — now what?
After purchasing the land, you can now begin making plans for what you want to construct there. Whether you’re building a house for yourself or a business, there are many different ways to fund the project.
SouthStar Bank offers several of the most popular methods for financing a construction project, including:
→ Construction-to-permanent loan. As soon as you move in, the loan transforms into a conventional mortgage. Money is disbursed as construction advances.
→ Construction-only loan. Similar to a construction-to-permanent loan, these loans cover the cost of building the house as it is being built. However, it won’t change into a conventional mortgage. At the conclusion of construction, the remaining sum must be paid in full, or you must refinance to a new loan that repays the construction loan.
→ FHA construction loan. These loans provide a one-time close construction-to-permanent loan and are supported by the Federal Housing Administration. With a credit score as low as 500, you may be eligible.
→ VA construction loan. The Veterans Administration allows qualified military service members or veterans to finance a home construction project using a VA loan. This is also a one-time close loan.
→ Owner/builder loan. You might be interested in supervising the construction of your home yourself if you dare to be a general contractor. Some lenders provide loans for owner-builder projects, in which the homeowner also oversees construction.
→ Hard money loan. A hard money loan could be used to finance your construction if you lack many regular financing sources. Although the property is used as security for these loans, they typically have greater down payments and interest rates than other options.
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Building your own home is a time-honored Texas tradition. We’re proud to help Texans realize this dream.
Land loans are used to purchase land without a house on it. You can use a land loan to build a home or a business.
There are several types of land loan. Vacant Land Loan or Raw Land Loan
This is unimproved land that cannot be developed due to the lack of utilities including roads, water and sewer lines.
Undeveloped Land Loan
Unimproved land is comparable to raw land in that it may have some older structures or basic infrastructure, but it typically lacks the full range of water, electricity, and other amenities that you’ll require. There may have been a house on this property at one time, but not anymore.
Improved Land Loan This kind of land is suitable for building a home and has access to utilities and highways. These areas could also be referred to as lots.
How do Land Loans Work?
Land loans are similar to conventional mortgages in that they require a down payment, and are backed by the assets they buy, and are repaid over time. A loan officer will assist you in applying for the loan and examine your credit while you work with them. With land loans, the borrower would follow a similar process to that of a typical home loan.
Although individual lenders may choose to set more strict requirements, the Federal Deposit Insurance Corp. sets minimum down payment requirements for land loans. The FDIC requirements are as follows:
Raw land: 35% minimum down payment
For unimproved land, a 25% down payment is required.
15% minimum down payment required for improved land
Land Loans – 9 Types
Land loans can be more difficult to obtain since they differ from conventional mortgages, but you still have options. Here are some possible financing options for your piece of land.
1. Bank or credit union loan
2. Government land loan programs
3. Home equity loan
4. HELOC
5. USDA loan
6. SBA loan
7. Personal loan
8. Buying a teardown
SouthStar Bank Land Loans
Our lenders specialize in land/lot loans and will help you secure your chosen site until you’re ready to build.
But we don’t stop there! We offer construction loans and construction-to-permanent loans to help you build your home. We make it smooth and easy to move through each stage of the custom home building process.
Ready to get started? If your down payment is lined up and your credit is in great shape, talk to us. We’re excited to help you secure the lot of your dreams.
Jean Ann McCarthy, Personal Banker & Proof Operator | SouthStar Bank Moulton
Jean Ann McCarthy joins SouthStar Bank Moulton as a Personal Banker and Proof Operator. Recently retired from education, Jean Ann holds an Accounting degree from Texas State University and has more than two decades of experience in finance. She is looking forward to bringing her financial background to the banking industry, making a difference in her coworkers’ and customers lives, and joining the supportive team environment at SouthStar Bank.
In her free time, Jean Ann enjoys spending time with her family, cooking, reading, and baking. She also enjoys traveling with her two favorite places being, La Jolla, California, and the Disney Parks, where she has made countless memories with friends and family. However, she enjoys visiting any location as long as she has a good book, a fruity beverage, and her family in tow.
Bianca Howle, Assistant Vice President & Branch Manager | SouthStar Bank Steiner Ranch
Bianca Howle joins SouthStar Bank Steiner Ranch as an Assistant Vice President and Branch Manager. Bianca is an alumna of Louisiana State University and brings more than two decades of banking experience. As Branch Manager, she is excited to bring her passion for community outreach and her ability to help cultivate her staff into strong leaders. One of her most significant professional achievements was creating and leading a leadership class for entry-level supervisors to teach them how to lead effectively.
Outside of work, Bianca can be found golfing with her husband or curled up with a good book. She also loves to travel, and her favorite destination thus far is Africa. One interesting fact about Bianca is that she majored in Opera while at college.
