Cons and Pros of Private-Mortgage Loans

Private money loans are also known as hard money and it comes from private lending companies who offer loans to home buyers to buy a specific asset. Generally, home buyers often find these lenders by engaging a real estate investment club in their area. These loans are often secured by home investors. But unfortunately not every home-owner will be successful getting fund from a private lender. Here are the major pros and cons of private mortgage loans.

This loan could be a great option for home buyers who are not able to qualify for a traditional mortgage because of less than exact credit, debt or for self-employed people who can’t always offer proof of a stable income. A debtor should remember that a person with a poor credit record can get a hard money loan if the project shows the profit.

Personal loans are not paid back over 30 years like a traditional loan. A huge big number of private lenders expect the loan to be repaid within a very short time like as six to twelve months. Lenders are often looking for a very quick return for their money, and they generally are not set up to offer a loan for several years the way a typical mortgage company is. Homes that need extra renovations generally can’t get qualifies for conventional mortgages, no matter how better a borrower’s credit score is. In those cases, private money can play a very important role. A non-traditional lender can step in and offer to finance to get the house in sell-able condition, then flip the house.

One major drawback of personal mortgage loans is interest rates. The rates of interest are much higher with a private money lending than with a conventional loan. Even, sometimes mortgage rates are more than double, often 12 to 20 percent per year. Basically, mortgage rates are very high because private lenders don’t need exact credit. Fund from private lenders are generally secured by the property in question, so it is usually not very important to the lender if the debtor has good credit or not.

If you own a house that you believe is a candidate for a personal loan, the approval procedure often takes just a couple of weeks, as opposed, it takes 30 to 45 days for a conventional loan. For many borrowers, qualifying a loan than fast is a very good trade-off for higher interest rates. Generally, private money lenders don’t need a long drawn-out loan process like a conventional mortgage does.

If you have a house and you want to rehab it, as well as you feel that you could make it better enough to boost its worth in a short time that would allow you to pay off a personal loan and replace it with a conventional sale, then applying for a private loan is a viable option. As long as you understand the caveats and complete your research, there has a possibility to successfully secure a property without a conventional loan.

Mortgage Refinance

Smart Ways to Advertise Mortgage Loans on the Internet and at Websites

We see all types of internet mortgage ads on web pages promoting mortgage products and services. The ads will come from mortgage bankers, mortgage brokers, big Banks, and lead aggregators who sell the incoming lead to their lead buying customers. What formats do these ads get displayed in? How many different types of Internet Ads […]

Read More
Mortgage Refinance

Understanding Different Options for Home Equity Conversion Mortgages

Seniors, 65 years or older, who own their home may be able to get the equity out of their residence without selling it. Home Equity Conversion Mortgages, or HECM, allows you to tap into what your home is worth and still be able to live in the residence. There are a couple of different types […]

Read More
Mortgage Refinance

5 Tips to Follow While Mortgaging a Home

The interest rates on all mortgages were around 4% throughout the entirety of 2015 but this rate is expected to reach the 4.5 mark. Thus in order to save a significant amount of money with respect to interest rates, there is some proper protocol that has to be followed. For this particular purpose we have […]

Read More