Will A Private Mortgage Benefit You?
Private Mortgage, sometimes referred to as Owner Financing, and Hard Money have many advantage 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 like a 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 a Hard Money.
For The Purpose Of This Article We Will Discuss 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:
- You have bad, or simply challenges credit
- You have decent credit, but some reason your credit score is lower than the requirement set by the banks
- 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
- Your property is not a good shape, and needs to be rehabbed or renovated
- Your property type is commercial or has commercial feature that do not conform to Fannie or Freddie Mac Standards
- You are trying to buy a property that has a nonconforming element to it such as a store front or illegal rentals
- You have more than 4 current mortgaged properties
- Your current property is not fully rented
- You need cash to purchase another property
- You need cash for business purposes
- You need cash to back real estate taxes
- You need cash to pay bank IRS or State tax liens
- You would like to pledge multiple properties in order to get a loan
- You are purchasing a business that does not have an established cash flow such as a new bar or restaurant
- You have been turned down by a Bank, Credit Union, or traditional credit union
Interest Rates On Private Mortgage
With a Private Mortgage 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.
Related> Private Lending Opportunity
Related> Funding of Private Money Lenders
Related> Become a hard money lender or investor