Is A Private Mortgage Right for You For Investing In Real Estate

This ARTICLE On Is A Private Mortgage Right for You For Investing In Real Estate Was PUBLISHED On July 21st, 2020

Private Mortgage sometimes referred to as Owner Financing, and Hard Money has many advantages but may also have many disadvantages. However, you need to generalize the 2 types of Private Mortgage that really exist:

  • This is a loan made to someone buying a home in which the seller of the property is taking in payments as make would on a more traditional mortgage
  • The Buyer has an amortization schedule for 15 or 30 years very similar to that of a regular mortgage they might get from Wells Fargo
  • This type of Private Mortgage is also referred to as Seller or Owner Financing
  • This type of Private Mortgage is made by non-bank and non-traditional mortgage company lenders
  • They are typically made at much higher rates and are made to borrowers that banks, credit unions, and traditional mortgage companies would consider riskier borrower types
  • They are often referred to as a Hard Money

In this article, we will discuss and cover Is A Private Mortgage Right for You For Investing In Real Estate.

The Second Type Of Hard Money Or Private Mortgage

What is the second type of hard money or private mortgage

Here is a list of just some of the reasons a Private or Hard Money Mortgage might be right for you:

  1. You have bad, or simply challenges credit
  2. You have decent credit, but some reason your credit score is lower than the requirement set by the banks
  3. You have difficulty documenting your income, you haven’t filed current tax returns, or are simply self-employed and you need a lender to look at your income situation a different way
  4. Your property is not good shape and needs to be rehabbed or renovated
  5. Your property type is commercial or has a commercial feature that do not conform to Fannie or Freddie Mac Standards
  6. You are trying to buy a property that has a nonconforming element to it such as a storefront or illegal rentals
  7. You have more than 4 current mortgaged properties
  8. Your current property is not fully rented
  9. You need cash to purchase another property
  10. You need cash for business purposes
  11. You need cash to back real estate taxes
  12. You need cash to pay bank IRS or State tax liens
  13. You would like to pledge multiple properties in order to get a loan
  14. You are purchasing a business that does not have an established cash flow such as a new bar or restaurant
  15. You have been turned down by a Bank, Credit Union, or traditional credit union

Interest Rates On Hard Money Loans

What is the interest rate on hard money loans

With a Private or Hard Money Mortgage you are going to pay a higher interest rate, and typically have a much larger down payment if you are buying a property, or require plenty of equity in your current property in order to qualify.  The rates are typically from 10-18% whereas a bank mortgage would range from 4.5-5.5%. This benefit of what a private money mortgage benefit would help you achieve would have to outweigh the much are interest rate you would be paying.

Ultimately, you have to decide on your own is a Private Money Mortgage right for you.

  1. Heidi M. Putman says

    I am in the market to refinance my home with a cash out, I have lived her for 15 years. I purchased it for $52,000 and was recently told by a Realtor that they estimated the value to between $150,000 and $160,000. I have the print out of my payments made to my mortgage holder which shows regular payments with extra paid at times. But I just found out that when the bank post my payments they are posting them differently each month with some months showing I paid no interest and all principal and other moths partial interest. This making it look as if I am in arrears a good deal of the time. I contacted the bank and discussed this with them and was told “it is just the way it is entered each month”. So I asked for the print out of my payment history to validate that I do make my payments. I want to refinance to get away from this bank, they are costing me a fortune in late fees that is not suppose to be. There are some things I would like to do to my property to improve the value of it and to make it more comfortable for my family. Along with paying off a bill. I hope you can assist me. thank you.

    1. Gustan Cho says


      You need to have been timely on all of your principal in interest payments to qualify for a mortgage loan. I can help you. Feel free to contact me at 262-716-8151. Or you can email me at As long as you have proof of canceled checks that you have been making timely payments, the credit bureaus should not be reporting you late. As long as you are not 30 days late, the bank should not be reporting you late.

      Gustan Cho

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