How Private Mortgage Lenders May Benefit You
Private mortgage lenders (PMLs) are an alternative to traditional bankers or mortgage companies. In the past, it could be difficult to find individuals with money to lend even when the loan was secured.
Today, mainly because of the internet, this type of lender is much easier to find. Here, you can learn about who might want to consider this less traditional type of financing.
The Advantages of Using Private Mortgage Lenders
People with income from self-employment or other unique forms of income often get turned down by the banks. You may have plenty of income to qualify for the loan and to make your loan payments, but you might not have the paperwork required by traditional financers. Private lenders typically require less supportive paperwork.
PMLs can help with second residences, vacation homes and investment properties. Most banks have tightened their purse strings, making borrowing for those purposes harder than ever before.
Some people fall in love with older homes that will simply not pass the inspections required by a traditional lender. The potential buyers are willing to provide the necessary TLC, but the loan officers will not approve the transaction. PMLs help those people fulfill their dreams. They help in many other situations, as well.
How Conventional and Private Loans Differ
Other than the differences already mentioned above, there could be differences in interest charged or loan-length. Sometimes the initial loan is used to improve the property, making it acceptable for more traditional financing. Everyone has different situations. Most people seek the untraditional financing options when they have been turned down by a bank for whatever reason.
Depending on the lender, you may get protection from changing interest rates. Most banks pay attention to changing interest rates that can occur during the construction of a new home. Negotiating with a private lender can be easier than negotiating with a banker. The lender has fewer rules to follow. You are talking directly to the lender, rather than an employee of a huge corporation.
More Types of Loans Offered
Mortgages are loans meant to finance a home. Raw property does not qualify for a mortgage. Sometime banks will provide construction financing and sometimes not. Private money lenders may provide construction financing or other loans that are not mortgages by definition.
As you can see, private mortgage lenders may be able to assist your needs in a number of ways. If you are in a situation that isn’t particularly banker-friendly, try an alternative. There are ways to work with practically any situation.
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