If you want to buy a property for your business or a property that you want to live in, then a common type of financing for that is a mortgage loan. Not all mortgages come from banks, which can prove beneficial for you.
There are people out there who will lend you the money with fewer restrictions than a bank. These are known as a private mortgage lender.
Fewer Qualification Issues
Financing with a bank usually involves a lot of required paperwork. Even if you have all of that paperwork, you still may not qualify. That’s because banks have specific rules and standards on who they should and should not lend to. You may not fit their standards on whether you can repay regardless if you know you can.
It is especially difficult for young people, as they can lack the right credit scores required to finance. A private mortgage lender has a less rigorous process, meaning you are more likely to qualify for a loan with them.
Less Wait Time
The property you want to buy isn’t going to stay on the market forever. As such, you may feel a sense of urgency in obtaining your finances. A private mortgage lender would be able to let you know during the early stages of the process whether you’re getting that loan, no matter which of the mortgage solutions you requested.
The lender would even be able to give you suggestions on how to make the process run more smoothly. A bank can take weeks or even months just to give you an update. That’s because they don’t make any changes to their processes for each of their customers.
You Receive Funding Sooner
Due to the fact that you need less documentation for a private lender, you can get your loan within days. Even if you don’t have a sense of urgency, it can give you a sense of security. You’ll not only be able to get your property sooner, but you’ll also be able to pay it off sooner.
A lot can happen in the period of a few weeks or months. You could be in between jobs or something financially troubling might come up. At least if a private mortgage lender is someone you know, they’ll be aware of the events in your life and give you some leeway.
High-Risk Buyers Have a Chance
A High-risk buyer is someone who may not have the proof to pay off a loan. These are usually independent contractors. Banks almost never take high-risk buyers. That’s because banks are very strict with their policies specifically so they don’t lose a single cent of their capital pool.
Private mortgage lenders are more likely to take high-risk buyers even if it’s their first mortgage. They are more flexible with their individual consumers, as they can find a plan that is best suited for that particular person.
Useful Option for House Flippers
House flippers are people who buy a home, renovate it, then sell it at a higher price. Essentially, they invest in a home to raise its property value and then profit from its sale. These renovations occur in a short period, which is why a private mortgage lender would be a better option.
Private mortgage lenders give a short repayment period. In addition, this type of finance is relatively quick and easy to get. This speed coincides with how fast someone flips a home and then sells or even refinance it.
Deadlines and Changes
You may have a deadline for selling your house, meaning you would need that first mortgage as soon as possible. Even without a time limit, you still might have multiple offers available to buy your property. The problem with this is that you have to secure the financing for your new home first.
Since the real estate market and interest rates are constantly changing, you may not have time to wait until a bank finally decides to lend you the money. A private mortgage lender quickly processes and funds your property so that you don’t have to do much waiting.
Additionally, you are probably understandably eager to live in your new home or set up your new business.
The main benefit of financing with a private mortgage lender is convenience. The bar for qualification isn’t set too high. As such, the process doesn’t take too long. Finally, you’ll be able to receive your funding much sooner.
There are more benefits if the private mortgage lender is your friend or family member.
So if you’re looking for conventional financing for a property that you need sooner than later, a private mortgage lender is most likely your best option.