The challenge for most borrowers in the last few years is not the low mortgage rates, it is the strict lending requirements and conditions imposed by the banks and other financial institutions. If you are having a tough time getting an approval for a traditional mortgage, a private mortgage lender can help.
Also known as hard money, private money funds come from private lending investors or companies that are willing to loan homebuyers funds for buying a property. Finding private mortgage loan providers is not difficult. You can find many lenders online. Please make sure to do your homework to help you make a wise decision.
Here are a few benefits of private mortgage lending.
Great option for flippers
A private mortgage option is a great solution if you only require funds for a short period of time. This is particularly beneficial if you want to ‘flip’ or sell the home within that period or expect to qualify for a traditional loan within a few months of acquiring the property. For example, if you are planning to make renovations that would boost the value of your current property and you are selling the home quickly or refinancing for a larger amount of money at the end of the renovation.
Short and quick approval process
When you apply for a traditional loan you may have to wait for a longer period for approval and funding. However, the same is not always the case with a private mortgage. If you own a property that you think is a candidate for a private loan then the process of approval and funding might not take more than a couple of weeks, or less than that. Getting a quick approval is an advantage for many people.
Easier to qualify
These loans make for a great option for those homebuyers who are not able to get an approval from traditional lenders because of multiple reasons. The prerequisites and conditions to qualify for private loans are generally easier compared to conventional lending.
Great option for ‘fixer-upper’ properties
Homes or properties that require extensive renovations often find it difficult to get qualified for conventional or traditional mortgages, irrespective of the credit rating of the borrower. In such cases, private mortgages funds play a crucial role. Similarly, someone might have stolen the copper plumbing, or vandalized the property. This is where a private lender can come to the rescue by providing financing to get the property in a saleable condition.
Look for quality service
When you apply for private mortgage funds you can’t always be assured of getting quality service. Many people have complained about the feeling they were taken advantage of during the process. However, this is not the case with all private mortgage lenders. Please make sure to interview all parties in the process to make sure all your queries and concerns are addressed. No matter what your doubts are, they should make time to answer your questions and review evaluate your situation to make sure private funds are a fit for your current situation and financial goals.
Is bad credit worrying you?
It’s natural to feel apprehensive about applying for financing if you’ve had previous credit challenges. Many traditional lenders won’t even look at your file if you do not meet minimum credit requirements. Private mortgages enable you to gain access to funds despite your credit record. In these situations, borrowers will require a sizable down payment or existing equity in their property to help reduce the associated risk and to prove to a lender that they have “skin in the game”.
Private mortgage lenders have leveraged the capital markets to offer much better and customer-oriented financial packages. You can apply for private mortgage lending if you want to renovate your property and gain access to quick and timely financial assistance. For those who need money in real-time, private mortgage lenders make for a great option.