Private Money Lenders: The Perfect Guide To Mortgage Loans
Private money lenders are the non-banking firms that offer mortgage loans to the customers for purchasing and renovating a property. Private mortgage lenders are hard money lenders that fulfill your short-term capital requirement. These firms issue loans for both short-term as well as long-term period. Private money loans are secured by some real estate property and can be used to purchase a new property. Private money lenders can be an individual or an institution offering mortgage loans.
How Are Private Money Loans Beneficial?
- Low Credit Experience – private lenders do not require the very high credit score. Applicant having a 550 credit score is also eligible to grab this loan facility.
- Fast Approval / Funding Process – these loans are easily available in a short time. The application process is easy as well as the private lenders do not take much time to sanction your loan. Private mortgage loans usually take 10-15 days for the complete process from application to approval.
- Rehab Financing Available – private money lenders also offer rehab loans. In this type of loan financing for purchasing a property and renovating it considered as a single loan. This is entirely different from traditional mortgages that require a home in an excellent condition to acquire rehab loan.
Some risks involved with the private mortgages:
Shorter Payback Periods – As compared to traditional mortgages, private mortgages have the shorter payback period. Usually, a private loan has a reimbursement period of 1-3 years, but some private mortgage lenders only allow payback within 3 to 6 months.
Possibility Of Higher Interest Rates – Usually, private mortgage lenders charge interest rates 6% to 13% which are much higher than the conventional mortgage lenders. Also, these lenders charge an assessment fee before approval of the loan. This fee can be 10% of the loan amount.
Private Mortgage Rates & Terms
As private mortgage lenders are of many types, so the rates, provisions, & eligibility criteria of the individual lender or company differ.
