The Benefits Of Using A Private Mortgage Lender
If you are looking to secure financing for a home, one of the choices you have to make is deciding whether to use a traditional bank or credit union for financing or whether you want to go through a private mortgage lender. There are pros and cons associated with both options, and both options cater to different types of people. Learning the benefits can help you determine which option may be right for you. Here are a few of the benefits of using a private mortgage lender to obtain financing for your home purchase.
Private Lenders Can Approve People Banks May Turn Down
One of the benefits associated with using a private mortgage lender is that a private lender can use whatever criteria they want for the approval process. Banks tend to weigh items like provable income and credit scores high when deciding who to lend to. If you do not have great credit and/or a traditional income source, getting approved can be challenging. Private lenders can judge you on whatever criteria they want, which may make it easier to get approved with low credit or alternative income sources.
Private Lenders Offer Creative Lending Solutions
Another benefit is that private lenders can offer creative lending solutions. If you are trying to fix a place up, you may be able to defer a payment for the first year or you may be able to pay interest only for the first portion of the loan and then pay a balloon payment later. Private lenders offer creative lending solutions to help you get into a home.
Private Lenders Tend to Work Faster Than Banks
The final benefit associated with using a private mortgage lender is that a private lender may work faster than a bank. Banks and credit unions require you to jump through a lot of hoops. Closing typically takes at least a month. Private lenders can work faster, helping you to get into a new home in as little amount of time as possible.
If you are looking to qualify for a mortgage, you have to decide whether to try to obtain a mortgage through a traditional venue, such as a bank or credit union, or whether to work with a private lender. If you are self-employed, have poor credit, have hard-to-prove income or are looking to finance a fixer-upper or vacation home, obtaining financing from traditional venues can be challenging. In these situations, working with a private mortgage lender may be your best option.