Home > Mortgage Loans > Private Mortgages Short-Term Financing Alternative
Private Mortgages Short-Term Financing Alternative |
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Private Mortgages are among the best
short-term financing alternatives that are available. The private mortgage
lenders make private mortgages and they are different from the conventional
lenders. They give away private mortgage loans that are different in a lot of aspects in comparison with the banks, government agencies and other lending institutions. Private mortgage loans are short-term loans based on the value of the asset put up as collateral. The deal is made on the basis of hard-money and is simple and hassle free. The criterion for a mortgage loan is easy and convenient for professional real estate investors. The time-period of the private mortgage can be from six months to three years. The mortgage is not made on the basis of a person's available credit or credit rating, but on the current value of the property put up as collateral. The market price of the property is calculated and accordingly the amount of the private mortgage loan is decided. A private mortgage lender generally loans out an amount to a real estate investor who would want to use it for cashing-in on the property that he/she might have, or for acquiring more property, for rehabilitation and even for enhancing the value of existing property. Private mortgage loans are equally beneficial for the ones who do not qualify for the conventional loans, and the ones who do not want the hassles of a lot of documentation and want immediate finance. The private mortgage loans are considered to be very secure, as the borrower gets an appraised value of his income producing property. The value could be anything between 60% and 70% of the market value of the property. Generally, about 55% or more is given away even on the non-income producing property. Popularity of the mortgage loans despite high interest rates: Of course, this comes with a price tag. The interest rate that is supposed to be given on a private mortgage loan varies between 12%-14% in the first liens and about 16%-18% in the second lien. "The rate is too high": this is the first thought that comes in the mind of the person who hears this. Yet, the popularity of private mortgage loans is intact. The reasons why a borrower prefers to apply for a private mortgage loan in comparison to the conventional loans that have lower interest rates are: The speed of closing in on a deal in any other conventional loan takes about 30 to 40 days whereas the mortgage loans get approved within a week or 10 days. The conventional mortgages involve a lot of paper work and determination of property rates. The whole process takes up a lot of time because the loan committee meets twice a month to discuss the status of the loan. In contrast to this, the private mortgage loans can be made available within a lesser span of time. The application process is very simple and easy. The borrower's financial and credit situation does not affect the private mortgage lender and what matters is the value of the mortgage. Therefore, when the borrower is unable to get the loan from conventional sources, within a short span of time, the private mortgage loans are the most secure and convenient loans. |
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