Private mortgages are not provided by banks or finance companies. There are groups of private lenders that can fund the private mortgage loans if somebody is in need of this type of mortgage loan. Private mortgage providing groups includes private individuals, real estate investment groups, partnerships, trusts, and some other types of funds.
These mortgage types are sometimes termed as hard money loan . Generally private mortgages are availed by very select type of clients. The client may have some personal reasons to avail these type of mortgaging. There are several issues which are often found related with the persons who are opting for private mortgage.
Credit, income, or property type and present condition of the property, these are the common issues related to a private lender.. If somebody has an issue that may be considered as higher risk, the person generally opts for private mortgage.
There are several other issues which can enforce private mortgage like:
Somebody has been already making the mortgage payments for a long time
Currently proceeding are going on against the applicant or a default notice has been filed against filed against the applicant
The credit or income of the applicant caused a denial for refinancing
May be in a need of an immediate mortgage loan
Trying to close a construction loan as early as possible
Before deciding for a private mortgage loan option, one should search for other traditional options because a private mortgage loan comes with higher interest rates. The private lenders are dealing with such a person who has been denied by the traditional mortgage organizations and thus the risk rate is also high and so the interest rate. Actually these mortgage forms are availed by the people who are not found eligible for the traditional mortgage loans with lower interest rates, because of some kind of problem related with the persons income, other loans, or credit history or score, etc.
The interest rates for a private mortgage loan remains between 9-18% which depends entirely on the amount of risk involved in the process and the kind of mortgage (first or second mortgage). The interest rate is the reward which the borrower pays to the lender as an acknowledgment of taking high risks and financing him/her.
The private mortgages should be planned for a short span of time because availing these form of mortgage for a long time does not sound a wise decision. This mortgage can be availed till the other mortgage options are closed. The borrower can modify his history and score while he avails the private mortgage loan. Generally it can take upto two years to mend the situation and this should be the ideal or the maximum span of time to avail a private mortgage loan. Although this option charges highly, it can be of huge relief in emergencies like someone who is about to loose his house or company, or somebody, who is not in a position to avail a general mortgage, and he needs the money to immediately for some reason, etc. This type of mortgage be can availed against a huge list of collaterals like house,commercial properties, real estate secured investments, etc.
Last Updated on : 24th August 2013