Private Mortgage loans
“What Is A Private Mortgage Loan And How Can I Get One?”
Private mortgage loans are loans issued by private individuals, investor groups, or mortgage investment corporations and secured by real estate via registered mortgage security.
There are basically two groups of mortgage lenders out there. The largest and most commonly known group comprise banks, trust companies, credit unions, life insurance companies, and other institutional lenders. The second group is comprised of the different types of private lenders mentioned above.
The form of security being taken in both cases is exactly the same from a legal registration point of view, and rights of the borrower and lender, which may have some differences from legal jurisdiction to legal jurisdiction.
The connotation of private mortgage loan is a mortgage lending facility provided is not from an institutionally based lender which is really the major difference between the two.
The private mortgage loan commitment itself is likely going to be significantly different than the standard bank mortgage commitment as most private mortgages are only for a term of one or two years with not renewal options in many cases.
A private mortgage loan is effectively an equity based loan whereby the private lender is making a lending decision primarily based on the value of equity in the property.
In most situations, although not all, a borrower will require a private mortgage loan if some combination of their cash flow and credit profile prohibits them from qualifying for a bank or institutional mortgage.
The private lender, while also concerned with cash flow and credit, do not have the same linear qualifying rules that an institutional mortgage lender would have and can apply a considerable amount of personal discretion being that most private lenders are individual investors.
In cases where cash flow and/or credit are in considerable distress, a private mortgage can still be acquired, but the loan to value can be reduced to allow for the higher lending risk to the private lender.
In terms of accessing private money, most private lenders do not have a retail presence and instead to work through either an individual private mortgage broker, or broker networks to provide them with qualified deals to consider for funding.
If you’re in need of a private mortgage loan, or would like to learn more about them, I would recommend that you give me a call so that we can go over your requirements together and discuss potential private mortgage loan options applicable to you.