Information Disclosure And Private Mortgages
“Private Mortgage Applications Will Require Different Amounts Of Information Disclosure”
Private mortgage application requirements will vary considerably from one private lender to another.
So the question often asked by borrowers is how much information should they disclose when trying to secure a private money loan?
The answer is going to vary depending on who you ask and here’s why.
Private mortgage lending is equity lending and as such, the primary criteria for providing financing is the market value of the real estate offered for security.
As a result, many private lenders are not concerned with low credit scores, higher levels of personal debt, and weak or sporadic cash flow. There are privates that will fund deals where people are in known financial trouble and where the risk of default is considerable.
But that doesn’t mean a private lender doesn’t want to know the full story from an applicant or gain full disclosure as to the borrowers credit and financial profile.
Yes, it is possible to provide less than complete information and still be granted a private mortgage.
But a lack of disclosure can also back fire if the lender finds out information withheld or denied prior to funding that they view to be detrimental to their lending position, which most likely cancel the deal.
Further, even if a lender would be ok with say a registered judgement being in place, or active collection accounts, or mortgage arrears on an existing mortgage, the fact that they either were not told about these issues, or when asked the borrower denied their existence is likely going to get the application for funding declined as well.
Most private lenders want to know the full story and from full disclosure of the pertinent information, they will make their funding decision, which is still going to primarily be based on the equity in the property.
So the best approach when applying for a private mortgage is to disclose all known financial, credit, and cash flow issues at the time of application and to honestly answer any and all questions posed by the lender, their associates, and any broker that is introducing you to the lending source.
This approach is more likely to get you what you’re looking for, and less likely to trip you up when trying to figure out what is the least amount of information you can get away with.
Private lenders are business people that invest all or part of their available money in mortgages and expect to get the funds advanced paid back. As a result there is not a great deal of stupid money out there that can be easily duped by a lack of information disclosure on the part of the borrower. Laying all your cards on the table will likely get you farther most of the time than playing an information shell game of sorts.
If you are in need of a private mortgage or want to know more about what options may be available to you, please give me a call and we’ll go over your requirements together.