Private Mortgage Lending

paper-clip-side-house-2Private Mortgage Lending is offered by private home loan lenders, private investors or Mortgage Investment Corporations (MIC). Private mortgages offer consumers home loans/mortgages when they are unable to secure one from a more official source (i.e. Financial Institutions). They generally have a wide variety of loan types that can be tailored to consumer's specific situation and work well for the short term.

Advantage

The best thing about private loans is simply their availability. When you have bad credit, recent bankruptcy or anything else that adversely affects a consumer's ability to secure a mortgage loan from the bank, private lenders save the day. The rules regarding the use of the loan amount tend to be far less restrictive than a conventional financial institution's terms and conditions. Consumers don't need to use the private lenders for their current mortgage; they will use it for property expansion or the purchase of more real estate, debt consolidation, equity take outs and much more. In fact, there are many people that use private lenders for business purposes/investing into businesses. Borrowing isn't limited to single entities.

Disadvantage

The most significant disadvantage to using private lenders is the considerably higher interest rates and lender fees that are involved. These are capped by the government, so they aren't steep or outrageous. However, many borrowers have no problem paying the higher interest rate and lender fees because of the difficulty of obtaining a conventional loan from financial institutions.

Private lenders serve a valuable need in the mortgage industry for property owners. Whether you need to refinance an existing mortgage, secure one altogether or purchase land, they give you an opportunity to do so when other avenues have failed. Of course, you pay for this opportunity in interest and fees, and there are other considerations if you can't pay the loan back. It is in consumer's best interest to take advantage of using private lenders if their situation calls for the use of private funds.

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