Private mortgage financing is a significant source of loans mortgage lending that is sometimes misunderstood.
Private mortgages are a powerful form of financing that fill a significant void in the financing market place and in many cases can be a preferred form of financing.
A private money lenders is an individual or business that advances funds in return for a mortgage with agreed to repayment terms and conditions.
As more institutional lenders rely on the MBS (Mortgage Backed Securities) for their source of funding, the criteria and underwriting becomes more rigid. For example, most institutional lenders will not fund a mortgage to corporations through their residential loan division. This could be on a AAA residential property, but they would only consider the loan through their commercial division.
A private lender would be a alternate source for this type of loan.
Some of the more common characteristics of private mortgages include:
There are several sides to private mortgage lending.
But private lending is also used for construction projects, quick closings for property acquisitions, commercial property financing for industries or building types not supported by the banks, etc.
Effectively, mortgages from private sources are bridge or mortgage loans that utilize real estate as security. Private lenders tend to be more regional in nature as knowledge of the local market becomes a very important lending consideration when looking at higher risk mortgage opportunities.
Private lenders have grown in numbers over the years as real estate lending is viewed to be more secure and lucrative than stock market investing by many individuals with available capital reserves especially older investors that want to hold shorter positions or turn their money over more frequently.
While there are lots of private money sources, there is still quite a bit of competition for the good lending opportunities; Private lenders can also be hard to find due to the fact that many are very specific to location and application type.
So, if you require short term financing that can utilize real estate as security, private mortgage financing may definitely be a fit.
In any case, your first step is always the same. And that’s to give me a call so that I can provide a quick and free assessment of your private mortgage options. I have a number of sources of private money to draw from and welcome the opportunity to assist you with your needs.