Established banks and mortgage companies have strict loan qualification requirements that must be met before they will issue a home loan. People who do not meet strict bank or traditional mortgage company qualifications have options. Private mortgages are alternative to traditional mortgages. Borrowers who take out a private mortgage are not necessarily a credit risk, and they may or may not have poor credit. In many instances, borrowers need capital quickly and bank and traditional lenders typically take about one month to complete a loan. Private lenders can complete private mortgage loans in days.
What Is a Private Mortgage?
Private mortgages are also referred to as private money loans, sometimes called “had money” loans. Private mortgages are real estate loans (mortgages) that are funded by private individuals and private lenders. Private money loans, such as a private mortgage, are real estate loans that are financed through a non-traditional source. This may include friends, family members, or any type of business. Many businesses engage in private money loans, even private mortgage options. There are many other ways to get money for a home other than going through a standard mortgage company.
How to Get a Privately Funded Mortgage
Private money loans (mortgages) can be obtained through private mortgage originators, private lenders, private mortgage funds and private money brokers. Private lenders who are located near you can be located by performing a search on the internet. GW Private Capital, Inc. is a direct private lender and specializes in arranging private mortgages.
Not All Privately Lenders Are The Same
There may be several private money lenders in your area and every one of them will offer different types of private mortgages Every private mortgage lender offers different loan programs most will usually have a speciality. Some private private originators only lend 1st position mortgages and others may offer 1st, 2nd and even 3rd position loans. The loan application and closing process for each lender is also different. Some are very systematized and perform quickly and others take longer and require much more paperwork.
When you contact a private lender, be specific with what you are looking for. If you need a small $20,000 loan, ask immediately. If you are a real estate flipper and need a loan to buy a fixer, make sure you ask the lender if they offer flip loans.
Call around and Interview several private lenders and learn about their experience and ask them if they are direct lenders or loan brokers.
Don’t put all your trust in one private lender. If you have borrowed money from a private lender in the past, great, you have a track record with them and you have a higher chance of actually getting the loan you were expecting.
Ask for a written loan proposal and letter of intent. Many brokers will promise you a specific private money loan and in the end, you may end up with a different loan, with different terms than what was represented.
If you can obtain a referral from a friend or someone who has obtained a private money loan, take that referral.
Research the private mortgage lender you are working with. Do they have good internet reviews, and do they rank high on internet rankings. Ask them for referrals.
Private Money Loans Are Extremely Beneficial
Private mortgages can be tremendously beneficial to property owners, business people and investors. When capital is needed fast and easy, private lenders can perform when banks have time constraints. Small loan amounts are easier to obtain from private lenders. Banks have minimum loan sizes. If your property is unusual, hard to appraise or is a fixer, most tradtional banks will not fund loans for those properties. Vacant commercial and apartments are harder to finance. Private money loans are a solution to a myriad of situations.