Category Archives for Private Mortgage Refinance
Private Mortgage Refinancing
“Private Mortgage Refinancing Watch Outs”
If you require private mortgage refinancing for a current private mortgage on a property you own, here are a few things to keep in mind for the time period before the a mortgage refinance will be required.
Regardless of the reason for the private mortgage financing, its going to be important that the mortgage is up to date with property taxes paid up in order to get the best potential refinancing options in the market place.
This is relevant whether you’re looking for a new private mortgage or an institutional mortgage.
If the mortgage and/or the property taxes are in arrears, there are likely going to be less interested lenders and the ones that are interested will likely require less favorable rates, terms, and conditions. While this isn’t always going to be the case, its certainly something to be mindful of.
Second, even if you are up to date on all your payments, its also going to be important to plan out your private mortgage refinancing action well in advance of the existing mortgage coming due.
Most private mortgages are only for a period of one year and there is no guarantee that a private lender is going to be prepared to grant you an extension, even if you have never missed a payment.
If this situation occurs, the private lender has the right to exercise the pledged security in order to get repaid.
This can result in a notice of sale for the property, which in some cases can end up being listed for substantially less than its worth.
If this were to occur, a below market value listing can make it difficult to get private mortgage refinancing from other lenders, based on what you would consider the true market value.
As previously mentioned, most private mortgages are only for a period of one year, and a single year of time can pass by pretty quickly, so its almost necessary in many cases to immediately start working on your private mortgage refinance as soon as the initial mortgage is closed to make sure you have your exit strategy in place to play out the mortgage at the end of the term.
Leaving the mortgage refinancing process to close to the end of the loan term can lead to disastrous results in terms of both your financing options and protecting the equity you hold in the property.
If you are in need of private mortgage refinancing some time within the next year, I recommend that you give me a call so we can quickly review your situations and discuss potential private mortgage refinance options available to you.
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Mortgage Refinance And Private Money
“Mortgage Refinance Can Be Both Completed And Avoided With Private Mortgage Financing”
A Mortgage refinance is typically done with a private mortgage in situations where credit and cash flow have deteriorated to the point where refinancing a mortgage is not going to be an option with a bank or institutional lender because of these stricter financing requirements.
Private lenders, for the most part, are going to be more expensive than a bank or institutional lender in a mortgage refinancing scenario, but if the borrower is just below the bank or institutional credit and funding requirements, they can still secure short term private financing that is only slightly higher that what they could get at a bank, especially if the loan to value is below 60%.
In most cases where private mortgage financing is used to refinance one or more mortgages it is because borrower has run out of options and must payout out their existing lender and/or generate additional funds for some other purpose such as debt consolidation.
On the flip side of the coin, private money can also be used to avoid a first mortgage refinancing in some cases.
For instance, there are times when incremental capital is required by the borrower, but a refinancing of the first mortgage would potentially lead to a higher rate alternative, especially if the borrower is in any type of financial and/or credit distress.
But if the first mortgage is up to date, its likely the borrower can carry on without disturbing it without the lender having any issue with their financial position.
In these situations, it may make more sense to leave the bank or institutional first mortgage alone and instead get a private second mortgage in place to generate the incremental funds required.
The private second mortgage will come at a higher rate, but the weighted average financing cost between the low rate institutional mortgage in place and the smaller private second, could still be significantly different that refinancing the first mortgage at perhaps a second tier institutional lender, or even private lender.
The best way to work through these different mortgage refinance options is to work with an experienced private mortgage broker that works directly with both private mortgage and institutional mortgage sources.
Having this type of expertise at your disposal will go a long ways to helping you determine the best course of action for your situation and mortgage refinancing requirements.
Mortgage Refinance With Private Money
“Mortgage Refinance With
Private Money From A
Private Mortgage Lender”
A mortgage refinance on either an existing residential or commercial mortgage from a private mortgage lending is a very common approach for a number of different mortgage financing scenarios.
Because private mortgages are more equity based than a bank or institutional mortgage, they have a fit where some combination of cash flow, credit, or time to complete is an issue with your mortgage refinancing requirements.
And while a private mortgage is likely going to be more expensive than a mortgage refinance action through a bank or institutional lender, the ability to just get financing in place can still result in a significant reduction in financing costs and cash flow requirements.
Let’s go through some of the more obvious applications of a private mortgage for a mortgage refinance requirement.
The most common situation is that funds are required for debt consolidation whereby additional financing needs to be pulled out of the equity in the home or commercial property, but there isn’t sufficient credit, cash flow or time to get this approved through a bank or institutional lender. An equity based mortgage through a private money lender can repay the existing mortgage with a new mortgage and provide additional capital as long as there is enough equity in the property to support a larger borrowing amount.
Another very common form of mortgage refinance through a private lender is when you are in current default on the existing mortgage and the lender is taking action to realize on their security, or you have reached the time for mortgage term renewal and your bank (as well as other institutional lenders) are not prepared to either renew your mortgage or offer you a new mortgage to pay out the existing first.
In these cases, a private mortgage can be the most obvious step to pay out the existing mortgage and save the property from foreclosure which would likely erode or destroy the equity in the property.
As mentioned earlier, even at slightly higher interest rates than a bank or institutional lender, a private mortgage can significantly reduce your average cost of capital if the new mortgage will be consolidating credit cards carrying interest rates in the high teens or beyond. And because most private mortgages require interest only payments, the cash flow impact on your budget can be similar or even lower than a fully amortized institutional mortgage.
If you’re in a situation where a mortgage refinance is required and some combination of cash flow, credit, and time will not allow you to get a new conventional mortgage from a bank or institutional lender, then a private mortgage could very well be your best available option.