Time and time again, many veterans in the real estate business will tell you that you should use OPM, or other peoples money, when investing in real estate. Doing so can protect your personal finances and ensure that youll still have a roof over your head in case a good real estate deal gone bad.
Some of the ideal types of funding that you can use for your real estate investments are
private mortgage loans. As the name suggests, a private mortgage loan is a type of financing offered by private individuals instead of traditional lenders such as banks, mortgage companies, and credit unions.
So whats the difference between a conventional loan and private money loan? For starters, conventional loans rely on traditional lending criteria, which include the borrowers credit score and current financial status, to verify a loans eligibility. When it comes to private mortgages, on other hand, the lender looks at the value of the property offered as collateral to determine if a loan application is worth approving or not.
Because
private mortgage loans are asset-based, they are among the primary sources of funding for real estate investors who cant qualify for conventional loans. Because a private lender is not that really interested with the borrowers credit rating, an investor can secure financing for a real estate project even if he has a low credit score.
One of the advantages of securing private mortgage loans is that these loans can be processed quickly, thus, saving a real estate investor a lot of time. A borrower doesnt have to waste time waiting for the results of his loan application because, should he qualify for a private money loan, he can get the funding that he needs in three days or less.
Real estate investors, particularly those who fix and flip houses, dont have to pay the cost of repairs on their investment properties. Private money lending usually has a loan-to-value ratio of 65%. For instance, if an investor will purchase a $35,000-property and the house has been found to have an after repair value of $100,000, the investor will get $65,000 from the lender. He can spend $35,000 to buy the house and use the remaining funds to take care of the rehab cost and other expenses.
Are you looking for a good source of private mortgage loans? Go to
www.RehabHardMoney.com and well help you find a reliable private money lender, wherever you are in the United States.
