Reasons for Using a Private Lender
While using a private mortgage can be a bit scarier than using a traditional lender like a bank or credit union, there can be reasons you are advancing to alternative lenders territory, like private lenders. Here are a few reasons why you may choose to or can only get a loan with a private lender.
- Don’t have time to wait for a traditional mortgage loan approval.
- Have a poor credit score
- Need money for home repairs or other emergencies (home equity)
- Buying a property that is considered non-traditional by a bank or credit union
- Debt consolidation
- Stop a power of sale or even a foreclosure
Because most private mortgage lenders only do short-term situations, these are ideal if you need money fast, just until you can secure a traditional mortgage. Other private lenders will factor principal payments in, but it just depends on which of the many private money lenders you use. Some private lenders will even finance a longer term.
That being said, though, just because they make you an offer, that doesn’t mean that you need to accept it. Ultimately, you need to select the offer that makes the most sense to you. This is different for everyone. Before you agree, though, verify that you are able to comfortably make your payments and select a term that makes the most sense to you. Depending on the mortgage loan that you go with, you may be able to refinance early with little to no penalty. Many private lenders, even though they have higher interest rates, are more likely to go with an open-term loan over a closed-term loan. Make sure you understand which is which.
Private Lender Fees
Also, consider this with a private mortgage lender, is the fees. There are usually more than going through the traditional mortgage rate. Some private lending fees you should be expecting are:
- Legal and Appraisal Fees
- Land Transfer Taxes
- Real Estate Fees
- Broker and Lending Fees
- Private Mortgage Insurance
These fees are important to factor in. Many of these fees are also included in a traditional mortgage. They just might be smaller. The broker fees aren’t going to apply if you use a traditional lender, the same with lending fees. Those are subject to the lender that you use.
With broker and lending fees, the lending fee is based on the lender as well as the type of mortgage you are getting. They tend to be higher for second mortgages than for first mortgages. The broker fee is normally between 3%-6%. Additional fees might also be charged to the type of mortgage you are getting as well.
If you are getting a first or second mortgage, just like a standard mortgage, the house you are purchasing is put up as collateral. Remember other important issues, agreeing to the mortgage and making sure the payments fit your budget is key to ensuring you do not lose your home.
Like traditional mortgage lenders, you are able to get home equity loans or mortgages through private lenders. These private loans may come with a penalty fee depending on where you are in your mortgage term and if your mortgage is open or closed. Before you go with either of these options, check and see if there are any fees or penalties involved. That being said, the fees are more likely going to affect a debt consolidation mortgage, and both of these types of private mortgage loans will also be considered secured loans with your home as collateral.
Mortgages with Private Lender Inc. @ MortgagePRO Ltd.
When going through a bank or a mortgage broker isn’t an option for you, or you are looking for an alternative lender that can help you get the money you need fast, MortgagePRO Ltd. can help. We specialize in loans for those with all credit scores and can get you your money as soon as the same day you are approved. But did you also know that we do mortgages? That’s right! Whether you are looking to consolidate your debt, tap into your home’s mortgage, refinance your mortgage or purchase your first home, we can help.
Another great thing about our financial products is that they can help you increase and maintain your credit score.
If you are looking to consolidate your debt, you can apply online for an equity loan. If you are looking for a mortgage, apply now and let one of our licensed specialists guide you through the process. You are also welcome to give us a call at 1-403-253-2022 or connect with one of our agents through chat box on our home page.