WHAT IS PRIVATE MONEY?
While traditional loans depend on the borrower’s credit score, employment status, debt to income ratio etc., private money offers other creative ways of qualification. The majority of the time, private money loans are secured by the property that is being acquired or by another asset.
Although private money lenders work by connecting a private investor with a borrower, these loans are still required to follow banking laws. These kinds of loans are great for business capital and are not recommended for private consumer debt purposes.
THE BENEFITS OF USING PRIVATE MONEY
When you find yourself in a need of funding for a business venture or an investment especially in real estate, a loan like this will be just what you need. Here are some benefits of private real estate loans vs. a traditional mortgage loan.
- Fast Funding – If everything goes according to plan, a private money loan can take a few days to get funded as opposed to a traditional loan, which can take weeks or even months.
- Flexible Terms – Working with your loan officer on the terms that work for you allows more flexibility to design the loan that serves your situation best.
- Less Paperwork – Because the loan will secured by an asset rather than the borrower, less paper work and documentation is needed to process the loan.
- Get Better Deals – Being able to bring fast cash to the table allows for better negotiations and better deals.
- Borrow More Money – Private money lenders can lend up to 100% of the purchase price with no money from your pocket.
- Easy Loans For Fix & Flip – Unlike traditional mortgage loans, private mortgage lenders love funding Fix & Flip investments.
HOW TO BEST QUALIFY FOR A PRIVATE MONEY LOAN?
Because the funding process will most likely go quickly once you begin and because the loan will be secured by the property in question, the most important thing that needs to be done first is finding and securing the property you want to invest in. Without the property being under contract, the lender will not want to invest time in working with you without a specific property to work with.
With that said, here are the steps to give you the best chance at qualifying for a private money loan.
- Write offers and secure a property Proof of Funds Letter.
- Make sure your offer is within range (call us for a free estimate and Maximum Allowable Offer criteria)
- **Property should be a 1-to-4-unit residential property, under 2800 sqft and on a 1/2 acre maximum.
Once you have secured a property and it falls within the above criteria, you are ready to show for cash. To apply for a private money loan go to
