Private mortgage loans are helping people have access to funds they won’t otherwise have by using their property as a collateral. Of course, one can try to get a traditional loan from the bank or some other financial institution but that may not always be possible due to a variety of reasons. Here are some of them:
Institutions often require that the borrower have a good credit score in addition to having a good property plus a lot of other requirements. In some cases, loans are not approved because the borrower’s property is not producing a good enough income to qualify as collateral or that it requires too many repairs or significant rehabilitation to be usable.
When institutions decline a borrower, it is often then that they seek other sources of funds and come across a private mortgage lender. Private mortgage lenders do not care about somebody’s credit score or some other requirements. They only often require that the amount to be borrowed is fair considering the property’s appraised value and the borrower’s projected income. Simply be able to pay the loan or have property that can offset the cost of the loan in the event of a default is all they require.
The Need for Privacy
Applying for a loan in an institution means filling up paperwork and a lengthy verification process leading to several people becoming aware of the loan application. If a person is going through a divorce or has a new lawyer that he or she may not be very comfortable with yet, this can be a very stressful time. Private mortgage lenders do not put borrowers in such a predicament and do not care if someone is delayed in his tax return or if his property information details are not up to date.
Mortgage money from financial institutions or banks can take 60 to 90 days to get to the borrower. This is because traditional lenders often require an extensive assessment of the borrower’s current financial status, credit history, tax returns, and financial statements aside from getting the appraised value of the property.
On the other hand, private mortgage lenders usually just take 7 to 10 days to complete a transaction. This is because they usually only require assessment of the property as the main criteria before approving a loan therefore resulting in a significantly quicker approval process. They can decide in a matter of a day or two with no need for a loan approval committee like what is seen in traditional financial institutions.
Needing More Money
Private mortgage lenders may allow the borrower to borrow more because they only use the property’s appraised value with no need to subtract their own capital or adjust based on the borrowers’s income. This means that the borrower may be able to push for a bit more as long as the private mortgage lender is amenable. Win-win!