When buying a home, most buyers go the traditional route and get a mortgage loan from a bank or another financial institution. Private mortgages, also known as “non-bank lending” or “alternative financing”, are mortgage loans that don’t go through a bank. Instead, they’re made directly between a lender and borrower. They are private because you don’t have to rely on an intermediary such as a bank or credit union to make your mortgage loan. Read on to learn more about private mortgages financing and how it might be able to help you buy that dream home sooner than you think!
What are Private Mortgages?
A private mortgage is a mortgage loan that is made directly between a lender and a borrower. Unlike the majority of conventional mortgage loans, private mortgages do not go through a bank or financial institution. Instead, private mortgages are made between two individuals – the lender and the borrower. Private mortgages financing is an attractive option for home buyers with less-than-ideal credit, as well as those who would like to have more flexibility in their mortgage terms.
How Do Private Mortgages Work?
Private mortgages loans are made directly between the borrower and the lender. The lender does not have to go through a mortgage broker or financial institution. Instead, the lender can be anyone who has the capital to make the loan. This person is known as the mortgage lender. If you choose to get a mortgage loan, you’ll likely need to pay a few upfront fees to the lender. These fees may include a mortgage origination fee and mortgage broker fee. While these fees are not required in all cases, they are standard in most loans. Unlike a conventional mortgage loan, you don’t need to get pre-approved for private mortgages. When you’re working with a lender for a mortgage loan, you’ll simply be asked to provide details about your income, assets, and other relevant details about your financial situation.
Benefits of Private Mortgages
With a conventional bank-issued mortgage, the lender has a lot of control over the mortgage terms. With private mortgages, you can negotiate your mortgage terms and conditions. You may also have the option of going with an Alternative Mortgage Product (AMP) if you’re approved for private mortgages loan. An AMP allows you to get your mortgage loan outside of standard mortgage guidelines. If you don’t qualify for a conventional mortgage loan, or you’re just not interested in getting one, private mortgages loan might be a better option for you. If you have less-than-stellar credit, a conventional mortgage loan might not be an option for you. But private mortgages loan may be a good fit for your financial situation.
Final Words
If you don’t qualify for a bank-issued mortgage loan due to your less-than-ideal credit, or you just don’t want to go through a bank to get a mortgage, a private mortgages loan may be a good option for you. This allows you to get a mortgage with less stringent requirements than those required for a conventional mortgage loan. If you’re interested in getting a mortgage loan, start looking for a lender today.
